#Ethiopia inflation rate increases slightly in May at 9.4% yy, 0.1ppt higher. Food inflation declined.

macroafricaintel

By Rafiq Raji, Ph.D.

CPI headline came out at 9.4% yy (0.8% mm), slightly higher than 9.3% yy (1.6% mm) recorded in the prior month. Food inflation declined by 0.7ppts in May to 10.1% yy (0.6% mm). Significant month-on-month drop in food inflation – rose 2.3% in April – is a positive in light of drought-induced food shortage fears. Non-food inflation ticked up in May, however, to 8.7% yy (1.1% mm) from 7.7% yy (0.9% mm) in the preceding month; partly reflecting recent increases in crude oil prices. Although, the decline in food inflation allows for some optimism, the general inflation trend thus far this year has been to the upside. With a likely continued steady depreciation of the Birr and expansionary fiscal policy in the 2015/16 fiscal year (increased yy spending announced in FY 2016 budget), this is likely to remain the case. A marked rise in the general…

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