October 5 , 2019
By FASIKA TADESSE ( FORTUNE STAFF WRITER )
Last month's inflation rate showed a 0.7 percentage point spike from the preceding month, which was 17.9pc, according to the latest consumer price index released by the Central Statistical Agency (CSA). The frequent holiday festivals and the advent of a new school year pushed the headline inflation rate to a five-year high in September.
Headline inflation, an indicator of the cost of living, reached 18.6pc last month, becoming the highest rate since 2014 when the rate went as high as 22.2pc.
Last month's inflation rate showed a 0.7 percentage point spike from the preceding month, which was 17.9pc, according to the latest consumer price index released by the Central Statistical Agency (CSA).
The increase was mainly driven by a surge in food inflation, which reached 23.1pc, while non-food inflation has also surged to 13.1pc.
Unlike the previous couple of months, the non-food inflation growth rate was higher than the food inflation rate, with a 1.1 percentage point rise. Food inflation registered a slight 0.3 percentage point increase.
The Agency attributed the two major holidays, New Year and Mesqel, as the cause for the rate increase.
"September is the beginning of Ethiopian New Year with frequent festivals that usually result in the rise of seasonal inflation," reads the report from the Agency.
In the reported period, price increases in major cereal types such as teff, barley, sorghum, maize and wheat flour were observed in the stated period, according to the report, which also adds that vegetables consumed daily such as tomatoes, onions and garlic showed a slight rise.
Price increases for clothing and footwear, house rent, housing repair and maintenance, energy, household goods and furnishings, health care and automobiles attributed to the jump in the non-food inflation rate, according to CSA.
Though the Agency claims that last month witnessed seasonal inflation, Alemayehu Geda (Prof.), a university lecturer and macroeconomist, argues that the rate increase is a result of fundamental problems in the economy.
Low agricultural productivity and the high rate of urban migration are the root causes that are pushing the inflation rate higher, according to Alemayehu.
"The preceding month's rate, traders' monopoly power on products and services and consumers' expectations [that] prices may increase, are additional causes," he told Fortune.
The administration of Prime Minister Abiy Ahmed (PhD) also believes that the expansionary fiscal policy appears to have crowded out the private sector’s access to finance and contributed to high inflation.
Inflation averaged about 15.5pc for the past decade and a half.
Anticompetitive prices and hoarding practises make it difficult to stabilise the inflation rate, according to Eyob Tekalign (PhD), state minister for Finance, who met the leaders of financial institutions and economists early last week to discuss the latest economic reform agenda conveniently characterised as "homegrown".
The reform agenda, which is expected to be implemented over three years, aims to push down inflationary pressure along with creating jobs, addressing the foreign currency crunch, reducing debt stress and addressing access to credit.
However, the macroeconomist forecasts that the rate would not go down until next December, which is known as harvesting season.
"Even after the harvest season, the figure wouldn't go down if agricultural productivity is not as expected," he said.
To push down the inflationary pressure, Alemayehu has long and short term recommendations.
In the short term, Alemayehu recommends the government promote local production of wheat and edible oil in a bid to stabilise the market and control the rate from further increasing along with investing in small scale farmers to double production by providing them with improved seeds and promoting irrigation farming.
As a long term solution, Alemayehu suggests the government work on capacity building at the government institutions [National Bank, Planning & Development Commission and Finance Ministry] that work on the economy, by bringing qualified and educated professionals on board.
PUBLISHED ON
Oct 05,2019 [ VOL
20 , NO
1014]
Fortune News | Dec 29,2018
Fortune News | Oct 03,2020
Radar | Dec 25,2021
Fortune News | Jul 18,2020
Commentaries | Feb 13,2021
Commentaries | Sep 10,2021
Editorial | Jul 24,2021
Fortune News | Mar 13,2021
Agenda | Sep 11,2020
Agenda | Sep 04,2021
November 27 , 2021
Against my will, I have witnessed the most terrible defeat of reason and the most sa...
November 13 , 2021
Plans and reality do not always gel. They rarely do in a fast-moving world. Every act...
October 16 , 2021 . By HAWI DADHI
Residing in a country with no capital market, an organised marketplace for trading se...
August 28 , 2021 . By HAWI DADHI
The streets of Addis Abeba are as varied as they are many, although too many of them have yet to be named. From the narrow alleyways of the...
May 21 , 2022
There was a great deal of handshaking and patting each other on the back at the Hyatt...
May 14 , 2022
Diana Yohannes is one of those actively engaging in social media platforms with her T...
May 7 , 2022
The Ethiopian Economic Association (EEA) recently proposed the formation of a macroec...
April 30 , 2022
There is no ambiguity in the UNDP's assessment of Ethiopia’s economic performance a...
Loading your updates...
Put your comments here