Nation keeps inflation rate single digit
Addis Ababa, 23 June 2014 (WIC) - The government of Ethiopia has managed to keep the general inflation rate at single digit for the last 15 months, the Central Statistics Agency said.
The inflation rate was recorded at 8.70 percent in May 2014, a 0.4 percent decrease from the previous month, Household Research and Price Statistics Director at the Agency, Alemayehu Teferi told ENA.
Inflation rate in Ethiopia averaged 19.69 percent from 2006 until 2014, reaching an all time high of 64.20 percent in July of 2008 and a record low of -4.10 percent in September of 2009.
Inflation rate dropped to single digit since March 2013. This demonstrates that efforts exerted to keep the inflation rate at single digit during the growth and transformation plan period is successful, he said.
The drop in the inflation rate is a result of various measures taken by the government to stabilize the market, he added.
Various measures including subsidizing some products such as wheat and edible oil, and removed taxes on flour and grains, price freeze and adopting contractionary monetary policy were taken by the government to address the challenge.
Food inflation dropped to 6.3 percent, showing a 1.7 percent drop from the previous month, while non-food items inflation raise to 11.4 percent from a 10.3 percent in April.
The drop in food inflation contributed for the drop in the general inflation rate. The inflation rate increase in non-food items doesn’t much affect the general inflation because of low contribution, the director added.
It is expected that the inflation in the coming two months is expected to show a slight increase because of the possible shortage of food items following the main rainy season, he explained. But the inflation will return to the current level starting from September.
Demand increase and shortage of supply, creating artificial shortage by hiding items and increasing amount of increase in money supply are the main factors in Ethiopia for rise in inflation.
It will be fine for better performance of the economy and the society if inflation rate be able to keep at this level, he said.
The director suggested that government agencies should prioritize to make sure that demand and supply are going parallel rather than focus on only monetary control. (ENA)
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