Anybody who is familiar with Shola Market would know that the area is the scene of a constant flurry of activity any day of the week. As one of the prominent marketplaces in the capital, shoppers from every corner pour into Shola to buy both food items and non-food commodities. Last week, however, walking down the streets of Shola felt more like walking through a graveyard than it did a market.

Anguach Mekuanint was sitting idly inside the shop operated by herself and her spouse. The couple sells berbere [Ethiopian spice mix], garlic, shiro and the like in a small quarter on one of the footpaths in the market.

“What sales?” she exclaimed when commenting about how business has been lately. “People don’t have money; they’re not buying anything from us."

Not only is the shop troubled by a lack of customers, but the level of supply has dropped too, according to Anguach.

The market has been overwhelmed by a slew of challenges starting from the COVID-19 pandemic to political instability and armed conflict to the ever-present forex crunch. Some vendors in the market, especially those selling non-food items, claim that the market has been dead since March of last year, ever since the outbreak of the pandemic. The prices of goods have been steadily increasing as well, reaching a peak after the conflict broke out in Tigray Regional State, according to the vendors.

It seems that the recent climb in the price of fuel was the final straw; and the market, the metaphorical camel. Following the petrol price hike, the cost of everyday necessities like bread, milk, teff, onion, berbere, and flour, to name a few, has shown a marked increase. Cross-country and city transportation costs have also increased as well as prices for commodities like coffee and sanitary pads.

Experts explain that the disproportionate increase in the prices of commodities can be attributed to the excessively long value chains in the market structure and the expectation that a spike in certain commodities' prices will translate to the same in others.

However, some, like Andualem Tilaye (PhD), a senior researcher at the Ethiopian Development Research Institute, believe that the interconnectedness of the market is not as simple as is usually presented. Even though the price increase in fuel cannot directly affect certain businesses, it is logical for the cost of outputs to go up as the businesses account for their indirect costs.

"All outputs are related to one another directly or indirectly," Andualem remarked.

Although Ethiopia is touted as being one of the fastest growing economies in Africa, scoring 8.2pc GDP growth during the second five-year Growth & Transformation Plan, which ended in 2019, and experiencing 9.6pc growth over the last fiscal year, runaway inflation remains a headache. Over the past decade, the nation's headline inflation rate averaged 14.4pc, driven by 15.2pc food and 13.7pc non-food inflation.

Last month, headline inflation registered at 19.2pc, while food inflation stood at 23.1pc. The numbers are expected to grow even more in the coming months, and the rise in the cost of living is noticeable by anyone.

Enanye Yalew is a single mother of two. She makes her living through weaving carpets, and she is struggling to make ends meet month after month. Her earnings are barely sufficient to sustain a whole family. This is why she has sought support from Together Ethiopia, a non-governmental organisation that supports blind women like Enanye.

“The cost of everything has increased. I can’t pinpoint something in particular,” she said. “We’re surviving through God’s will.”

The incessant surge in the cost of living has impacted her severely, leaving her practically incapacitated. Individuals like her are subject to even more misery as job opportunities or any means of extra income are slim. Much like many other economic and social affairs, it is the less privileged who are left to bear the burdens of poverty as well as growth.

Literature shows that Ethiopian economic growth was not accompanied by double-digit inflation rates before 2004. Experts explain that the exponential change in inflation can be attributed to post-2005 election economic policies when the government resorted to inflationary financing, simply explained as money creation.

The Homegrown Economic Reform Agenda adopted in September 2019 highlighted past challenges and set out ambitious plans in order to attain a stable macroeconomy. The pillars of the reform were to be the easing of structural bottlenecks and the creation of new opportunities and sources of growth, while its challenges were cited as the foreign exchange imbalances, a heavy external debt burden, limited access to finance and high inflation.

The Reform plan has been criticised for putting forth solutions without identifying the root causes of the country’s macroeconomic imbalances for which remedial actions should have been implemented. One of the critics in this regard is Alemayehu Geda (PhD), a macroeconomist with years of experience and several studies published on the topic.

Alemayehu argues that there is a sectoral imbalance in planning, where the planned growth does not result in the growth of food supply and foreign currency. The expert points out that food production growth does not match population growth and migration to urban cities.

Endalkachew Sime, the deputy commissioner at the National Planning & Development Commission, explains that inflation needs both structural and urgent interventions. The Homegrown Economic Reform Agenda is focused on addressing immediate needs, according to him.

Despite his argument, however, on-the-ground situations have not improved in the slightest. In relation to strategic interventions, the Commission has identified increasing production and productivity as one of the pillars of its 10-Year Perspective Plan. In addition, radical involvement from the private sector as a driver of productivity is another of the pillars.

Mamo Mihretu, a senior advisor for the Office of the Prime Minister, stated that basic supply intervention is being carried out through the import of wheat in addition to policy interventions.

"We recognise inflation is a serious macroeconomic challenge," he said. "It's not something that will vanish right away."

Mamo argues that economic growth, as set out in the Homegrown Economic Reform Agenda, has been hampered due to factors attributed to the COVID-19 pandemic and the "law enforcement operation" in Tigray Regional State.

The go-to remedy for hikes in the cost of living frequently carried out by the Ministry of Trade & Industry and the Addis Abeba City Administration is strict control of "illicit" market activities. Early last week, the City Administration Trade Bureau stated that it would be holding hoarders and price gougers accountable for the rising costs. Later the same week, the Administration announced that it was taking steps against 30,000 businesses whom it says are being held accountable for hoarding and hiding commodities and unreasonable pricing.

The State Minister for Trade & Industry, Eshete Asfaw, backs the government's belief that the current increase in the cost of living is caused by illegal hoarding and pricing. A taskforce headed by city mayors has been organised to regulate markets across Ethiopia. In addition, half a billion Birr has been dedicated to strengthening consumer cooperative unions, according to him.

However, some experts disagree, saying that the inflation this time around is not necessarily caused by growth in demand. Rather, built-in expectations, the depreciation of Birr, and rising fuel prices are the root causes, according to Andualem. The expert also raised his concerns about how the government defines illicit sales.