Sunday, May 26, 2024
BusinessRising inflation “not related to politics”

Rising inflation “not related to politics”

  • February inflation surges to 15.6 percent

Prices of goods and services have soared leading to 15.6 percent year-on-year inflation rate as the government fails to contain price hike.

A Central Statistics Agency (CSA) report issued on Wednesday showed that the year-on-year inflation soared to 15.6 percent in February from 13.4 percent in the previous month.  Food inflation was at 20.9 percent in February, contrasting to the 18 percent in the previous month. Non-food inflation was at 9.8 percent, compared with 8.4 percent in December, the report noted.

According to the Ministry of Finance and Economic Cooperation (MoFEC), the double-digit price buildup has nothing to do with the ongoing political crisis. Hadji Ibssa, public relations director with MoFEC said that the year-on-year inflation mostly relates to seasonal factors than political situations of the country. 

According to Hadji, had it been the political crisis, the prices of food items would not be limited only to specific food items, which are mostly demanded through the two months period of great fast or the Lent when members of the Ethiopian Orthodox Christian Church and the Catholics avoid meat, egg and dairy products.  Hence, prices of vegetables, spices and peppers have witnessed an increasing movement, he argued.

Following the abating crisis in parts of the country stay-home strike coupled with closure of shops and blockades of roads have been disrupting free movement of people and commodities.  But for Hadji that does not count. He said that prices of grains and cereals have shown no surprising increases. “If politics was to blame then prices couldn’t have picked peppers or cabbages only,” the PR director said.

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The Government of Ethiopia vowed to contain inflation to single digits in a bid to maintain stable macroeconomic conditions in the country. The inflationary pressure comes at a time where the government had devalued the national currency by 15 percent against the US dollar in October 2017.

Cognizant to the situations, pundits warned the premature devaluation would result inflationary conditions to erode certain macroeconomic gains. Countering the arguments, governors of the National Bank of Ethiopia (NBE), have staged arguments stating, time has come to form competitive export prices for Ethiopia’s commodities. Both officials of NBE and Hadji argue that non-food items have shown increasing trends mostly conforming to imported inflation. Hefty surge in the price of steel as Hadji said is one specific example to mention in relation to the imported inflation.

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