Ethiopia Inflation Rate Eased to 28.8%
The consumer price index that measures Ethiopia’s headline inflation rate eased slightly for a fourth consecutive month to a two-year low of 28.8% in July of 2023, down from 29.3% in the prior month.
Like other peers in the region, economic performance has declined while the government continues to formulate growth-driven policies to boost the real sector of the economy as conflict inflicted pains on productive activities in the country.
Statistics office data showed that price index slowed down for both foods, down to 27.3% from 28% in June 2023 and non-food products declined to 31.1% from 31.4%. On a monthly basis, consumer prices rose by 2.6% in July, after increasing by 3.3% the month before. Ethiopia is among the top African countries battling with increased debt load.
The country’s reserve of USD1.5 billion in June 2022 was low relative to the size of the bond falling due in 2024, although debt service on the bond is modest, Fitch said in a rating note. Ethiopia is seeking a new IMF agreement and, since early 2021, debt treatment under the G20’s Common Framework.
Early in the year, Fitch Ratings downgraded Ethiopia to CCC. The rating note explained that the downgrade of Ethiopia’s LT FC IDR to ‘CCC-‘ reflects the lack of identified external financing necessary to meet substantial external financing gaps, along with a material decline in Ethiopia’s external liquidity.
This was balanced against the November 2022 peace agreement reached in the Tigray War, which will improve the medium-term macro and fiscal outlooks; the expected easing of global supply chain constraints, which will help to ease inflationary and external pressures; and the improvement of public debt metrics. #Ethiopia Inflation Rate Eased to 28.8%
