Addis Ababa, Ethiopia (22 April 2022): According to the CPI report released in April 2022 by the Central Statistic Agency, Ethiopia’s yearly inflation rate accelerated to 34.7% in March of 2022 from 33.6% in the preceding month. This is a setback to the progress made in decreasing inflation in February when the price rise had slightly declined from 34.5% to 33.6% and showed a decline in the rate of increase in the cost of living in Ethiopia.
Some of the price hikes that stand out include that of the food (41.9% to 43.4%), alcoholic beverages and tobacco (32% to 44.1%), recreation and culture (46.7% to 48.1%), and restaurants/ hotels (24.6% to 32.6%) inflation. While the rise in food prices can be attributed to many supply-side factors, the increase in the price of edible oil is sure to be one of the pressing reasons. The rest of the highlighted entertainment goods may credit their price rise to the loosening COVID19 protocols and increased national and international mobility.
The mitigating factors, on the other hand, can be seen in the housing and utility, health, communication, transportation, and education sectors, which have gone down from 17.9% to 14.8%, 37.9% to 31%, 6.8 to -3.3%, 4.4% to 1.8%, and 28.4% to 24.3%, respectively. Recent administrative measures to control inflationary pressures, such as the implementation of a temporary price cap for food items and a three-month ban on landlord rent increases might account for some of the deflation observed.
In brief, from 2011 to 2022, Ethiopia’s Consumer Price Index averaged 122.19 points, with a high of 267.20 points in March 2022 and a low of 64.20 points in December 2011. Since 2017, there has been general upward pressure on inflation, which coincided with the Ethiopian government’s policy decision to devalue the birr against the dollar by 15% to encourage exports.
The country’s major macroeconomic concern remains the rapid rise in inflation.
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