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Inflation surges to seven year high

With no signs of abating, the consumer price index inflation in Ethiopia is reported have reached a seven-year high in the just ended month, intensifying fears that it might exacerbate the already distorted macroeconomic situation in Ethiopia, The Reporter has learnt.

A monthly report released by the Central Statistics Agency (CSA) shows headline inflation, which is used to measure the cost of living using a Consumer Price Index (CPI), jumped from 15.5 percent to 17.9 percent in August.   

Moreover, Food Inflation has increased to 23 percent from 20 percent.

“Increases in price of major cereal types (especially Teff, Barely, Sorghum and Maize) has continued unabated in the current month,” reads the report. In addition, some of the vegetables which are important daily ingredients for food (ONIONS and GARLIC) have shown an exaggerated rise during the last month which has contributed to the rising inflation figures. However, the prices of Wheat, Rice and Bread have shown a sign of decline in some regions.

At the same time, Non-food Inflation has increased from 10.3 percent to 12 percent, according to the report from the Agency. 

“The rise in inflation in the Non-food component is mainly due to rise in the prices of Clothing and Footwear, House Rent, Housing Repair and Maintenance, Energy (Firewood and Charcoal), Household goods and Furnishings, Health Care and Transport (Specially, Household Cars),” reads the report.

It can be recalled that back in May 2019, headline inflation showed an 11-month high at 16.2 percent where food inflation increased from 14.5 to 20.7 percent. In the same token, non-food inflation increased from 0.1 percent to 11 percent.

Back in June, following the escalation in the cost of living, it can be recalled that a taskforce was formed to come-up with a solution for the continued increase in inflation. The taskforce was to conduct researches and forward recommendations to the Macroeconomic Committee, chaired by Prime Minster Abiy Ahmed (PhD).

Just last month, experts have urged the government to introduce a remedy in order to manage the ever increasing inflation.

According to Alemayehu Geda (PhD, Prof.), a prominent economics professor from Addis Ababa University (AAU), said that the government’s investment trends over the years has applied constant pressure on inflation, making life difficult for the poor.

Speaking at a forum organized by Forum for Social Studies (FSS), he said that the government needs to focus on inflation, “to provide structural solutions to structural problems as well as upholding the Developmental State Model along with democratization, supported by knowledge-based decision making and economic planning.”