Inflation continues to deteriorate living conditions
By Solomon Bekele
in Capital, Tuesday, 20 September 2011, Addis Ababa, Ethiopia
Once again the annual inflation rate continued to soar deteriorating the living conditions of that segment of society who lives on a fixed income sources. It reached 40.6 percent in August from 39.2 percent a month earlier, the Central Statistical Agency (CSA) disclosed in its monthly report released last week. In June the inflation rate jumped to 38.1 percent from 34.7 percent in May.
“The 40.6 percent rise in general inflation rate is due to the fact that the General Consumer Price Index (CPI) of 259.2 percent observed in August 2011 was higher than the corresponding 184.3 percent General Consumer Price Index (CPI) observed in August 2010,” the CSA said.
The food inflation has increased in August to 49.9 percent from 47.4 percent in July. The reason for the increase in the food inflation rate, CSA elucidates, was that the 282.5 percent Food Consumer Price Index (CPI) observed in August 2011 was greater than the corresponding 188.4 percent Food Consumer Price Index (CPI) observed in August 2010.
“Relative rises were observed in the indices of most food components, especially:- wheat, maize, barely, sorghum, pulses, meat, butter, coffee & tealeaves, pepper, potatoes, tubers and stems and others in August 2011 as compared to August 2010,” the report confirms.
Accordingly the total price index of cereals in August 2011 has increased by 52.3 percent compared to a similar month last year which significantly contributed to the rise in the indices of food and the General Consumer Price Index. Among the food components, a rise in the indices of cereals, pulses, coffee, pepper whole and other food items was observed in the same month.
Non-food inflation has also increased by 27.6 percent in August 2011 as compared to the inflation observed a year before. Standing at 27.6, the non-food inflation showed a slight declining trend as compared to the previous month. In July, the non-food inflation was 27.8 percent, slightly lower than the 27.9 percent rate in June.
But in August the majority of the non-food components showed an increasing trend; in particular there were increases in the costs of clothing and footwear, furniture and furnishing and personal care.
In a recent controversial report the International Monetary Fund blamed the government for failing to control the excessive monetary growth which triggered inflation. Though the National Bank partially admitted that there indeed exists excessive currency in the system, the primary reason for inflation cannot be limited to such a reason.
Despite repeated promises by the government to put quash the rising cost of living, prices continued to soar throughout August, which saw nearly a 2.6 percent rise in food inflation. The overall inflation rate soared by 1.7 percent while the non-food inflation rate increased by a slight percentage of 0.2. The overall inflation rate was 39.2 percent in July while non food inflation was 27.8.
Annual food inflation in July was 47.4 percent, a two year high, the Consumer Price Index Central Statistical Agency (CSA) revealed in its publication last week. The annual food inflation rate was at 45.3 percent in June. It climbed to 49.9 percent last August.
Food on average accounts for more than 57 percent of Ethiopian households’ costs. Prices that were steadily deflating a year ago have been rising continuously since the September devaluation of the birr against major foreign currencies by an average of 20 percent.
Even though, many economists continue to argue about the possible multiple causes behind the rampant inflation in Ethiopia, the Ethiopian Prime Minister Meles Zenawi, recently admitted to MPs that it’s caused by excess currency in the system.