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Consumers Reel as Headline Inflation Bites


March 13 , 2021
By FASIKA TADESSE ( FORTUNE STAFF WRITER )


The statistical agency's latest data indicated that the average price change of goods and services in February grew by 20.6pc. The report comes as the cost of living rises following the never-ending increase in the prices of food items and other commodities.

The consumer price index (CPI) from the Central Statistical Agency indicated that Ethiopia’s inflation pace last month only increased by 1.4 percentage points from the previous month. However, the prices of most items in the market skyrocketed, exerting pressure on consumers.

Unlike in previous months, the food inflation growth rate last month slowed down slightly by 0.3 percentage points to 22.8pc, according to the Agency. Usually, food inflation is behind the accelerating headline inflation.

Price escalation of cereal products hastens food inflation, according to the report from the Agency. Vegetables and pulses types; sugar; edible oil; spices, mainly pepper; potatoes; and coffee have contributed to an increase in the rate of inflation, it indicated.



The non-food inflation showed a rapid growth rate of 18pc due to a rise in the prices of alcohol and tobacco; khat; clothing and footwear; housing repair and maintenance; firewood and charcoal; medical care; transport; fuel; and gold.

The month-on-month general CPI for February, which measures the price change between the two most recent months, has increased by four percent compared to January.


The average change in the price for a basket of goods and services that consumers purchase has been hovering in two-digit rate territory for the past 15 years, far higher than the government's single-digit target. For the current fiscal year, the government aims to confine the rate to 9.5pc. However, the lowest rate registered so far this fiscal year was 18.2pc in December.

Inflation is coupled with seasonal and fast price hikes leading to the rise in the cost of living, according to Wassihun Belay, an independent economist.




"Due to this, people adjusted their consumption and started to consume basic and specific commodities," he said. "This upshot a sudden and drastic price spike of some basic commodities such as teffand red pepper."

Wassihun also recommends the Agency release data that is very specific and includes figures that show which time has shown a price rise and at what rate.

Eyob Tekalign (PhD), state minister for Finance, stated that the country is facing accumulated inflation that has been racking up over the past 10 to 15 years.

“There was capital accumulation due to massive state investments,” said Eyob, who added that the government has launched a three-year programme, the Homegrown Economic Reform Agenda, to address these problems.


Modernising the monetary policy framework, lessening the debt stress, and working on local production are among the solutions that have been under implementation to address the macroeconomic imbalances, according to Eyob, who says achieving these will take time since inflation and the problems have accumulated for years.

As an immediate intervention to stabilise the market, the government is pursuing a speedy procurement process for major consumer commodities through state-owned enterprises, according to Eyob.

Two months ago, the government formed a 16-member economic advisory council that is expected to be a regular source of independent, objective and evidence-based advice on the government's economic policy. The recently launched 10-Year Perspective Plan also targets to confine the inflation rate to 7.2pc in the coming decade through fiscal and monetary policies.

The authorities should develop a culture of going out and informing the people what causes the inflation and how they are planning to address it, said Wassihun.



PUBLISHED ON Mar 13,2021 [ VOL 21 , NO 1089]


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