Addis Ababa, Ethiopia 9 (10 February 2023)
Ethiopia is currently experiencing a high rate of inflation, with an average of 34% in 2022, which was previously at an average of 27% in 2021. The latest data from December 2022 shows a year-on-year inflation rate of 33.8%, which is slightly better than the high of 37.2% in May 2022.
Despite the 1.1% average monthly price increase in Q4 2022, it remains uncertain if this trend will lead to a positive outlook for the country’s inflation rate, as previous decreases in monthly inflation have proven to be short-lived in the past two years.
While food inflation has been moderating, with a decline of 10 percentage points since early 2022 and negative month-on-month inflation rates in two of the past three months, non-food inflation is becoming a major contributor to the overall inflation rate. Prices for non-food items, including fuel, transport, alcoholic beverages, furnishings, and housing, have jumped significantly, contributing to a 35% year-on-year increase.
Administrative measures, such as recent fuel price increases, excise/tariff adjustments, and import bans on selected consumer goods, seem to be playing a significant role in recent monthly inflation. This may explain why non-food inflation has now exceeded food inflation over the past three months.
Despite this, global food price measures, such as the FAO food price index, remain around 20% below their 2022 peaks, suggesting that food prices are yet to show any significant declines in Ethiopia.
Source: Cepheus Capital
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