Food prices push Ethiopia inflation to nearly 30 pct

by yeEthiopiaforums
  • Ethiopia’s April inflation rate jumps to 29.5 pct
  • Soaring prices in region have triggered protests

ADDIS ABABA,  (Reuters) – Ethiopia’s year-on-year inflation rate rose for a second straight month to 29.5 percent in April, from 25.0 percent a month earlier, driven by a sharp rise in food prices, the statistics agency said on Tuesday.

“The total price index of cereals in April 2011 has increased by 14.6 percent as compared to the same month last year, which significantly contributed to the rise in the indices of food and the general consumer price index,” the Central Statistical Agency said in a statement.ethiopia-food-price

Ethiopia has imposed price ceilings on more than a dozen commodities including some essential foodstuffs. Food accounts for just over 57 percent of the basket used to measure the inflation rate.

Government officials have accused traders of artificially inflating food prices on the back of higher global prices and a September devaluation of the birr currency ETB=.

Ethiopia is grappling with rising inflation like other countries in Africa, including Uganda where spiralling food and fuel prices have led to protests.

Reporting by Aaron Masho

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Anonymous User May 11, 2011 - 6:42 am

Ocean why did you post these two articles? Are you saying Ethiopia is getting worse and we shouldnt invest?

Addis Samson May 11, 2011 - 7:42 am

Zacharias, Ocean is just reporting what is in the news. You are reading something that is not written. Although he has the right to say so, he didn’t say” not invest in Ethiopia” But coming to the point of inflation though, it is really sad that it is happening. Small economies like Ethiopia, inflation may not be as consequential as it would in larger economies. However, it is a sign of unhealthy economy. It was not long ago that they devalue the currency. The wold bank will cheer them on and sometimes even force them to do it. I am more interested in the volatility of the currency and the overall economy. By now almost every country has gone through the wave and beginning to recuperate or has already done so. The world economy has more or less blunted the cascading economic downturn and recovered enough to withstand a shocking tsunami, nuclear disaster, Libya, and overall oil price spike. None of these seem to have meaningful effect and hence we have a nice and steady stock market growth for the most part. Forecasts are that this will remain to be the case for the good part of 2011 through 2012. It is puzzling to see such a volatility in Ethiopian economy. My sense is that most of domestic food products got hit because of by its very nature of being uniquely produced in Ethiopia. Price of Teff and Bberbere will be determined in Ethiopia and Ethiopia alone. China or any other foreign exporter can’t balance the marker because no one produces Teff. That is my 2 cents on the inflation, of course not the only cause or reason.

Anonymous User May 11, 2011 - 8:42 am

Addis, since you seem to fully grasp the concepts of economic growth/hardship and its effects on the economies of nations like our Ethiopia, can you give me an honest unbiased opinion or prediction on the hopes of the Ethiopian economy? Are we on the right track? Can you give us pointers? What do you recommend…

Ocean Oc May 11, 2011 - 1:42 pm

I couldn’t answer it better than how Addis did. I am not suggesting or advising anybody to not to invest in Ethiopia. I think that is individual’s decision depends on their needs and willingness.
Is our country situation getting worse? Yes it is. Regarding to food price and inflation it is just a matter of looking back the previous months reports to see what is going on.
By the way this report comes from the government institution, food price is did a 32% rise for the moth of April.
According to the economic expert part of this inflation is a result of government policies that scares farmers and traders.
Please listen a VOA report with an Ethiopian economist Dr. Weldai Amha on the current food price rise if that explain it a little bit more why we are having this situation.

Addis Samson May 12, 2011 - 12:42 am

Zacharias, most of my comments are unbiased. If it ever biased it is biased towards truth or facts. I do however make a very open critics towards the governments’ handling of pretty much everything. I don’t hide that and I think it is a healthy thing to do. The good thing that is going on in Ethiopia is the obvious economic activity. There are numerous construction and general economic activities. Especially in power generation sector, they are doing a pretty good job. I am saying this not as an endorsement of the process by which all the contracts are awarded, as we know most of them are a no-bid contracts. But I see the end result as a good thing for Ethiopia as a whole, despite the fact that there are corruptions here and there. In trade and transportation, there are certainly good improvements. Many road and bridge constructions have been carried out. There are many macro and micro level activities going on. There is a lot of work to be done in telecommunication. It is an insult to be second to Somalia and no self respecting Ethiopian want to be subjected to that level of service. Part of the reason that Ethiopian governments don’t want telecommunication to be privatized is because of national security. Dergue has done this and the current government inherited it and basically continued the practice. The logic is that they don’t want to leave the information arm to be handed to a private company, out of government. They see it as an extension of law enforcement apparatus, in some cases. My guess is that it won’t last too long given the information age. But my biggest issue with the government is the lack of opposition and freedom. Opposition is a good thing for the country as a whole. It serves as a watch dog for the people. They point out corruption and allow for a broader ideas from all walks of Ethiopian experts. The same thing with press freedom. Currently there is none. When governments resort to coercion to promote any idea, then they lose legitimacy regardless of economic progress. Tunisia’s economy was growing. there was very encouraging signs before the revolution. However, the problem was hidden in the numbers. The distribution of income was skewed and the gap between rich and poor was unsustainable. At the right time, people fed up because the growth couldn’t translate into actual improvement in people’s livelihood – a trigger point fora serious problem to come. The rest was history. When, for example, I see a $5 billion government project (the Dam) that is being awarded/subcontracted to a company that is run by the government, it is a huge red flag. These type of money is a one time transfer of wealth from one section of the population to another. Ethiopians are being asked to forfeit a month’s salary to buy bonds. I don’t know if they are given the actual flow of money during this project. My point here is just to give a simple example. When there is a serious opposition, they will ask the government all kind of questions before the OK the project. Currently that is not happening, sadly.


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