Inflation rate continues to soar

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Measured by the consumer price index, the annual inflation rate as of September 2020 stood at 18.7 percent.
According to the latest consumer price index report from the Central Statistical Agency, despite the figure reducing from the preceding months, the figure in comparison to last year’s exact month still shows increase. That is from 18.6 percent to 18.7 percent. It is worth noting that throughout the months of 2020 the inflation rate mostly stood above 20 percent. This main upward pressure came from both food and non-food components.
Food component prices with a special focus on teff, maize, and sorghum have shown massive price increase in comparison to last year. This comes in a critical time as the country continues to struggle with the effect of the locust swarms, the COVID-19 pandemic and flooding. The bombarding effect of heavy rainfall has led to floods which has destroyed crops as well as livestock whereas the swarm of locusts has destroyed pasture and crops. On similar lines the pandemic outbreak has reduced the population’s income and has restricted movement.
On a slight shed of light, the food components have shown progressive decrease from July through September 2020 (that is from 24.9 to 22.0 to currently 21.2 percent). This is also comparatively lower than 2019 September figures of 23.3 percent. In 2019, the rise in price of red pepper had significantly contributed to the inflation both then and now. However, the report also reads that some food items including fruits and pulse have shown decrease which has resulted in current decrease in this section of inflation.
The other contributor to inflation, that is, the non-food items, has shown a considerable increase in comparison to September of 2019. The percentage of inflation is up from 13.1 to 15.5.
“The rise in the price of nonfood products including the soaring price of alcohol and tobacco, khat, housing repair and maintenance, energy, and medical care are factors that have played a role in the growth of the inflation rate,” the agency explained. Additionally, the inflation has been caused by the hike in gold and other ornaments.
With regards to combating the inflation the government is playing an instrumental role in cleaning up informal mining by channeling gold sales through the central bank thus attracting more investors in the process. The Central Bank is also offering higher prices in order to mop up gold to control illegal smuggling. Similarly, on nonfood items the government is working on stabilizing the Cement market which is an integral component in the construction industry.
On the food-items front, the government is working aggressively on the domestic production of items such teff and wheat, so that the public gets enough production at a lower cost. The government is also striving to remove tax and duties from imported edible oils.
The annual inflation rate from July 2018 – June 2019 and July 2019 – June 2020 stood at 12.6 and 19.9 percent respectively. This sharp rise will continue to soar until drastic and effective implementations are undertaken, so it seems.