Ethiopia Inflation Slumps to 2.7% as Food Price Drops

27 July, 2009

July 27 (Bloomberg) -- Ethiopia’s inflation rate plunged to 2.7 percent in June after food prices, the biggest component in the consumer price index, declined.

Inflation slowed from 14.2 percent in May, the Addis Ababa- based Central Statistical Agency said on its Web site today. Food prices, which make up 57 percent of the index, fell an annual 3.4 percent, after gaining 11.6 percent the month before.

Price pressures in the Horn of Africa nation eased as a 78 percent annual jump in food costs in June 2008 fell out of the calculation. Inflation peaked at 61.7 percent in August and the country registered the second-highest inflation rate on the continent in 2008 after Zimbabwe, according to the United Nations.

“The main reason for the fall in general inflation was due to the decrease in the price of food components, mainly cereals, as compared to June in the previous year,” the statistics office said.

Prime Minister Meles Zenawi said in April the government would reduce the annual inflation rate to less than 10 percent by June. The economy probably expanded 10 percent in the year through June, boosted by a “good harvest,” Finance Minister Sufian Ahmed, said on June 7.