Like other countries in East African region, Rwanda is suffering from a sharp rise in inflation this year, accompanied by a weakening of its currency against the dollar.
Rwanda’s inflation increased to 7.07% as of July up from 5.49% in the previous month, according to National institute of Statistics of Rwanda.
However, Rwanda’s Minister of Finance and Economic Planning, John Rwangombwa (pictured above), told Igihe.com that government wished to contain inflation to single digits and boost economic growth to at least 7% in the 2011/12 financial year.
The latest publication on its official website shows that all Rwanda’s general Consumer’s Price Index(CPI) is established at 108.0 which stands for an increase of 0.28% over the previous month which was 107.7 of consumer’s prices indices.
The Consumer Price Index (CPI) is a measure of the average change over time of goods and services purchased by households.
As of July this year the all urban general index has been established at 110.8 showing an increase of 0.40% over 110.4 of the previous month.
The urban annual change increased by 7.14% compared to 5.82% in the previous month that gives a general inflation rate by an annual average of 2.8% during the month of July this year.
“The underlying inflation rate excluding fresh food and energy is increased by 0.46% if compared to the previous month and increased by 7.04% on annual change. The annual average underlying inflation rate is + 2.4 % in July 2011 up from the previous month 1.9 percent,” The report reads in parts.
In rural areas it has been established at 106.5 standing for an increase of 0.26% over the previous month which was 106.3 and its annual change increased by 7.03% compared to 4.80% in the previous month.
It is indicated that the increase in the consumer prices index of 0.40% is attributed to primarily the increase in Food and non-alcoholic beverages (1.14%).
Additionally it has been noted that the increase of 1.14% in prices of Food and non alcoholic beverages is primarily attributable to the increase of 1.87% of vegetables, 2.55% of Non-alcoholic beverages and 0.45% of meat.
This brings an annual change of increase in the general index of 7.14% mainly due to the rising prices of Food and non alcoholic beverages(10.55%), Transport (11.85%) and Education (20.85%) which contributed +3.70%, +1.54% and +0.71%. respectively.
The local goods increased by 6.62% on annual change with a monthly change of 0.47%, while prices of the imported products increased by 9.20% on annual change with a monthly change of 0.12 percent.
The prices of the fresh products had a positive annual change of 8.25% between July 2010 and 2011.
The CPI uses a Modified Laspeyres formula to calculate the index. The reference population for the CPI consists of all households, urban and rural, living in Rwanda.
The household basket includes 1,136 products observed in many places spread all over the administrative centers of all provinces in Rwanda.
All kinds of places of observation are selected: shops, markets, services etc and more than 29,200 prices are collected every month by enumerators of the National Institute of Statistics of Rwanda and of the National Bank of Rwanda.
The index reference, or base, for the CPI is February 2009. The weights used for the index are the result of the Household Living Conditions Survey (EICV II) conducted in 2005-2006 with a sample of 6,900 households.
Meanwhile, the Uganda Bureau of Statistics(UBOS) indicated that Uganda’s year on year inflation jumped to 21.4 percent in August, the highest since February 1993 mainly due to a rise in food prices.
Uganda’s inflation rate climbed from 18.8% in July, as the impact of a severely weak shilling currency added to inflationary pressures through imports. Uganda is a major trading partner with Rwanda.
“During the month, food prices rose by 2.4% due to increases in prices of sugar, meat, chicken, fish, eggs, bread and pineaples. The increase in prices of these food items is mainly attributed to low supplies to the markets,” UBOS said.
The inflation rate in Kenya was last reported at 15.5% in July of 2011.
Tanzania’s inflation rate was last reported at 13% in July of 2011.
Burundi’s year-on-year inflation rose to 9.1% in July from 8.6% in June, partly due to high transport costs, the country’s statistics board.
“The transport index increased by 25.3% over the last twelve months to July, up from 19.9% in June,” said Elie Ndiririkirirenza, an official at the Institute of Economic Studies and Statistics (ISTEEBU).
In mainstream economics, “inflation” refers to a general rise in prices measured against a standard level of purchasing power.
Previously the term was used to refer to an increase in the money supply, which is now referred to as expansionary monetary policy or monetary inflation.
Inflation is measured by comparing two sets of goods at two points in time, and computing the increase in cost not reflected by an increase in quality. There are, therefore, many measures of inflation depending on the specific circumstances.
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