Published: March 11, 2022 at 3:09 a.m. ET
By George Mwangi
Special to Dow Jones Newswires
Ethiopia’s headline inflation eased to 33.6% in February from 34.5% in January, the U.S. Department of Agriculture said late Thursday.
“Ethiopia has been struggling with a high rate of inflation since the past five years mainly driven by spikes in food prices,” USDA said in its March Ethiopia’s global agricultural information network report.
Food inflation stood at 41.9% in February, up from 39.9% the previous month, while non-food inflation fell to 22.9% from 27.3%, it said.
“The major factors driving food inflation are spikes in the price of cooking oils and fats, non-alcoholic beverages, bread and cereals, fish and sea foods, dairy, and meat products,” the USDA said.
“Weak domestic market supply due to agricultural production constraints and steady devaluation of the local currency are among the major factors contributing to the staggeringly high inflation levels.”
Although the Ethiopian government took various policy actions, including monetary, fiscal, and structural measures to control-price escalations, the inflation levels remain in the double digits, it said.
“Currently, the impact of armed conflict in northern Ethiopia and severe drought in the eastern parts of the country are exerting upward pressure on food prices,” the USDA said.
“Furthermore, weak domestic market supply driven by limitations in agricultural production, rise in government spending due to the armed conflict, and increase in the price of fuel are contributing to the rising food inflation levels.”
Investing Insights with Global Context
Understand how today’s global business practices, market dynamics, economic policies and more impact you with real-time news and analysis from MarketWatch.
The Ukraine-Russia conflict is impacting Ethiopia’s food market, it said.
Both Ukraine and Russia are major suppliers of wheat, crude and refined cooking oils–especially sunflower oil–and other agricultural inputs to Ethiopia, the USDA said.
Write to Barcelona Editors at barcelonaeditors@dowjones.com