Ethiopia’s Inflation Rate Hits Nearly 15 Percent in December VOA

January 16th, 2011 Print Print Email Email

Ethiopia’s annual inflation rate soared to 14.5 percente in December, partially due to steep increases in food prices following a currency devaluation. The government is hoping newly imposed price controls will ease consumer pressure.

Ethiopia’s Central Statistical Agency Friday said inflation had jumped from 10.2 percent in November to 14.5 percent last month. A statement said non-food items had gone up nearly 23 percent while food prices increased by almost 9 percent.

The government devalued the local currency, the birr, by 17 percent against the dollar in September, significantly raising the price of imported goods. Ethiopia already had a significant trade imbalance, with $1.2 billion worth of exports against nearly $7 billion in imports in the most recent year.

Last week, the government announced price controls on more than a dozen essential consumer goods as costs on food skyrocketed.

The caps on prices of such items as bread, meat, sugar, beverages and edible oils have proved to be popular with consumers in a country where per capita income is less than $400 a year. But they have sparked howls of protest from shopkeepers, who have seen their profit margins cut sharply.

Some business operators have complained they are being forced to sell products at less than what they paid for them.

News agencies this week reported the government has closed down more than 100 retailers and suppliers who raised prices of price-controlled goods. The reports say retailers could face heavy fines and imprisonment for repeated violations.

Economists and opposition politicians say price controls distort markets and have been repeatedly shown to be counterproductive wherever they have been tried. Retired Ethiopian lawmaker and former World Bank director Bulcha Demeksa says it is a mistake to blame the business community for the government’s mistakes.

“I’m not so angry with the retailers, sellers,” said Bulcha. “I’m angry with the government, because the government counts on its capability to control price. Prices cannot be controlled. It has been tried everywhere in the world and it has failed. Unless you make it a totally totalitarian society it is impossible to control prices.”

Consumers, however, are widely supportive of the price caps. Shopper Shenkut Teshome says average Ethiopians have seen their purchasing power shrink to the point where many people were having to cut back on food.

“It is very important that the government should do the price control. Otherwise, with the free economy everybody is raising his price, and nobody can buy with his money, and at the end there is nothing to buy, and that makes a big difference,” said Shenkut. “The economy of the country stops growing, and people has not much money so they can afford anything, and if you don’t have any price control, at the end of the day the people will starve.”

A trade ministry official this week told of plans to expand the price controls to other consumer goods. He noted that the government’s recent five-year economic plan has set a target of holding the inflation rate down to six percent a year.

  1. aha!
    | #1

    The Ethiopian Farm Economy to my understanding is far from being considered as a business oriented and market driven Farm Economy, except for the cash crops. It is still at the substisence level after 37 years of change of government with land reform of changing hands from land lord to tenants without blodshed, now with land holdings still in place, all lands are being under the government, denies individuals in the rural and urban dewellings denies the individuals private ownership to land as means of production putting the individuals in serfdom to TPLF/eprdf regime and political and economic strangle hold of the country in the farm economy by TPLF and TPLF affiliated enterprises.

    The subsistence farmer, who after assessing fod for yearly supply for the family sells grains to the market to buy oil and kerosine and perhaps clothing. Add to that the farmer may be forced to bring market grains to the market to pay for fertilizer debt to TPLF and TPLF affiliated enterprises or sell his livestock or go to jail on fertilizer that applied on a rolling topography and has perhaps not produced a significant increase to say the least on polluting the rivers and streams of drinking water. Add to that the environmental impact of drought and frost bites on these cereals produced on the supply side of the political economy of Agrarian Economy, to say the least there is no definite pattern of transfer of goods and services in the agriculture sector.

  2. aha!
    | #2

    Having said that I am inclined to support the ideas of shortage for the reasons stated above by an economist Seid Hussien, not hoarding by the marchants or raising prices in response to the demand in a market driven economy. To which the TPLF/eprdf regime should have responded with raising salliries for the government workers including the military and police forces as a cost of living adjustment, instead of hampering on the merchants. This sounds like the communistic mentality of the Derg era. Add to that institue a private ownership of land in rural and urban areas as means of production to which the individual owner/operator takes personal responsibility on other inputs on his property to run it as a business in a capitalist oriented free enterprise or subject to being exploited by TPLF and TPLF affiliated enterprises. Add to that the assessment of the environmental impact of fertiliser application on the heath of farmers drinking from the polluted streams and rivers and replace the farming system with sustainable soil and water conservation practices and companion cropping system that holds the soil intact and adds fertility to the soil as well provide feed for sheep during the dry seasons on these rolling topographies of the central and Northern highlands, which is densely populated, which could not produce for subsistence much less to bring out to the market. This asserts the shortage from the farm level.

  3. Drama
    | #3

    ECONOMICS AND BUSINESS ARE 2 DIFFERENT DICIPLINES. GOVERNMENT SHOULD NOT BE INVOLVED IN MICROMANAGING BUSINESSES. POLITICS AND ECONOMICS GO HAND IN HAND, NOT BUSINESS. SIMPLY MELES “THE SO CALLED SMART LEADER” SHOULDN’T MEET BUSINESS PEOPLE AND RESTRICT THEM FROM HIKING UP PRICES, WHILE HE IS DEVALUING THE BIRR TO GET EXTRA DOLLARS. TYPICAL PURE COMMY OR IS THIS A DRAMA? IMAGINE WHEN OBAMA MEETS BILL GATES AND SAYS, HEY BILL YOUR COMPUTER PRICES ARE HIGH, YOU CAN’T SELL THEM OVER $2,000 ANYMORE. WHATEVER SYSTEM THEY ARE USING IN ETHIOPIA IS NOT FROM THIS MODERN PLANET. MAYBE FROM THE 1400′S. WHAT DO WE EXPECT FROM PEOPLE THAT HAVE IMPLEMENTED AN ETHNIC SYSTEM FROM THE IRON AGE? THAT IS WHY THE WEST HAS A TOY TO PLAY WITH. THE BIG FINANCIAL ORGANIZATIONS SUCH AS THE WORLD BANK ALLOWS 3RD WORLD CURRENCIES TO BE ADJUSTED BY THEIR OWN GOVERNMENT NOWDAYS; IT IS NOT ACCORDING TO THE GOLD SYSTEM ANYMORE. THIS MEANS THAT WHEN THE DICTATORS AND THEIR FRIENDS WANT TO DEVALUE THE BIRR TO (25 BIRR TO $1) NEXT MONTH, THEY CAN DO IT. JUST LIKE THAT. THEY MIGHT GIVE YOU A PHONY REASON, BUT THEY CAN DO IT WHEN THEY NEED TO DO IT FOR WHATEVER REASON IT IS, MOSTLY TO THEIR DOMESTIC AND FOREIGN INTEREST ADVANTAGES. YOU ASK THE PRESDIENT OF THE WORLD BANK WHY THEY ALLOW 3RD WORLD GOV TO CONTROL THEIR CURRENCIES THESE DAYS? HE MIGHT TELL YOU THAT IT WILL HELP THE 3RD WORLDS ECONOMIES GROW FASTER, HELP THEM CREATE EFFICIENT POLICIES… BLA BLA… . YA RIGHT. MAYBE IT WILL HELP THE 3RD WORLD MAFIAS, MOST OF THEM DICTATORIAL GOVERNMENTS, TO CONTROL INTERNAL AND EXTERNAL FLOWS OF MONEY. HELPS THEM GET MORE DOLLARS WHEN THE ORGANIZATION CAN’T FUND THEM, RIGHT? INADDITION, IT WILL MAKE THESE THIRD WORLD PLACES ALMOST JUST AS EXPENSIVE AS THE 1ST WORLDS AS COST OF LIVING HIKES UP. WHEN MELES’ MASTERS SHOW UP, NOT A LOT OF ETHIOPIANS WILL AFFORD TO DO THE RIGHT THING FOR THEIR OWN COUNTRY. THINGS WILL BE SO EXPENSIVE FOR ETHIOPIANS TO CONTROL THEIR OWN MARKETS; LAND, FIRMS, REALESTATE,… ETC. WHAT IS THE ADVANTAGE? FOREIGN INTERESTS, MUDI & WOYANE COMPANIES WILL GET VIP TREATMENT FOR THEY ARE THE ONCE THAT WILL AFFORD TO BUY OUT OUR LANDS AND BIG FIRMS AT THESE OUTRAGEOUSLY INFLATED PRICES,AND THE POOR ETHIOPIANS WILL JUST WORK FOR THEM. ISN’T THIS WHY EDUCATION IS TILL 10TH GRADE? SO WE CAN DO THE SMALL TECHNICAL JOBS? JUST SLAVE AND NOT BE WELL EDUCATED…. SOON THE GOVERNMENT WILL SAY… OH PEOPLE. YOU STILL DON’T HAVE A JOB, HERE THESE FOREIGN COMPANIES WILL GIVE YOU A JOB SO YOU CAN MANAGE TO EAT. NOW, SO YOU THINK THE INTERNATIONAL SYSTEM IS DISIGNED INTENTIONALLY OR NOT? IF YOU HAVEN’T FIGURE IT OUT YET, YOU WILL SOON, WHEN IT HITS YOU ON YOUR FACES. DON’T YOU THINK MELES DOESN’T KNOW THIS? HE DOES. HE JUST CHOSE TO GIVE THE COUNTRY’S WEALTH TO FOREIGN INTERESTS AND FEW WOYANE BUTTLICKERS INSTEAD OF THE ETHIOPIAN PEOPLE. PERIOD. SELLING US OUT ON THE SLAVE AUCTION TO THE HIGHEST BIDDER. IF YOU ALL SLEEP AND KEEP ON COUNTING YOUR ETHNIC DESCENDANCIES, THIS WILL HIT YOU ON YOUR FACE SO SOON, YOU WILL NOT AFFORD TO SEE YOUR COUNTRY. IT STARTED IN THE SOUTH, MAYBE THE DICTATOR IS PRAYING HE WILL MAKE IT IN THE CENTRAL AND IF THE DEVIL ALLOWS IT IN THE NORTH, HE STILL WOULD NOT REFRAIN FROM TRYING IT. HE HAD TO PICK THE MOST VULNERABLE SOUTH TO START EXPLOITING OUR PEOPLE. HOW IN THE HAIL CAN ETHIOPIANS COMPETE WITH FOREIGNERS IN THE FUTURE??????? IF THE GOAL OF A GOVERNMENT LIKE THE EPRDF IS ONLY TO FEED SO WE CAN EAT AND FAHRT, WE ARE IN A SAD SITUATION. EPRDF COMPARES ITSELF TO DERG. APPLES AND ORANGES. COMMUNISM VS “ALLEGED CAPITALISM”? I DON’T UNDERSTAND HOW SOME ETHIOPIANS COMPARE THE OUTCOME OF TWO DIFFERENT ECONOMIC SYSTEMS? IT IS A FALLACY. IN 2011,MIND YOU IN 2011, WE HAVE A GOVERNMENT THAT THINKS FEEDING THE PEOPLE IS A BIG DEAL? WOW. IF WE TELL EPRDF MEMEBERS TO HAVE A SHUTTLE PROGRAM TO SPACE, THE WHOLE PARTY WOULD HAVE A HART ATTACK FROM LAUGHING.SO WEATHER THE NEWS SAID INFLATION OR DEFLATION IN ETHIOPIA, IT IS A DIRECT RESULT OF GOVERNMENT ACTIVITY NOT THE MARKET OR THE DEEDS OF OUR COUNTRY MEN. NO FREE MARKET, NO LAND PRIVATIZATION, NO FREEDOM OF ENTREPISE….. WHAT SHOULDN’T BUFFLE YOU IS THE REMARKS OF THESE FOREIGN MEDIAS,LIKE REURTERS, VOA, BBC, ETC ACTING AS THEY ARE WORKING IN GROUPS, YES THEY ARE, LIKE THEY DON’T KNOW WHAT IS UP? YOU ALL FIGURE IT OUT ET’S. HAVE A NICE ONE NOW. THIS IS NOT ANYTHING ABOUT OUR BACKGROUND, POLITICS… BLA BLA… THIS IS A HARD REALITY THAT YOU ALL HAVE TO FACE IN THE NEAR FUTURE. GOOD LUCK ET’S. TAKE THE DRAMA IN TUNISIA AS AN EXAMPLE.

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