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The latest quarterly pricing data released for October, 2012 by Access Capital’s research Unit revealed that one of the most important indicators of the nation’s inflation(sample data taken from Addis Ababa), consumer goods, showed mixed results with many important food items showing sharp increases compared to the same period in 2011.
The report revealed a double-digit year-on-year price increase for nearly a third of surveyed goods and services or 57 out of 184 items surveyed while in contrast 30 percent of the items in the survey showed year-on-year price declines.
Ethiopia’s staple crop, teff, both the more common and expensive white teff and the less expensive black teff, showed double-digit price increase likely to pile pressure on the urban population which is already being squeezed by high food prices and double-digit inflation. This seems to have had an impact on the price of injera which shot up by 40 percent, with a piece of Injera, on average, costing 3.50 birr.
However the price increase seems not to have been restricted to these foodstuffs, with other items like table salt, green pepper and onions showing double-digit price increases. One fare which stood out was Broccoli which showed a 200 percent price increment.
Bucking the trend was the price of cooking oil which, in the case of imported cooking oil, showed no price change while the local one showed a price decrease of 17 percent, likewise followed by Ethiopia’s most popular national food, Shiro, which similarly showed a double-digit price decrease. Additionally, butter and coffee showed a lowering of prices by more than 30 percent.
One piece of data which is expected to relieve some pressure on the working public is the price of services, especially those of transportation, which showed no change or even a moderate price decrease.
Another positive development included in the report, construction and building materials which used to be very expensive and at one time threatened to stall Ethiopia’s construction boom, indicated strong price decreases. For instance, in the case of a quintal of Mugher Ordinary Portland Cement (OPC), the price dropped to 250 birr, while other construction inputs like iron products and cables showed double-digit price decreases from the previous year.
Nevertheless, double-digit price increases were observed in wooden construction inputs like timber.
The price of petroleum products also showed minimal to moderate lowering of prices, which should be an encouraging sign of price stabilization for an oil importing country like Ethiopia, with Benzene showing a 10 percent decrease followed by diesel oil with a 5 percent decrease and kerosene barely changing prices with a 1 percent price decrease.
Urban land lease prices which were widely feared and considered to rise sharply after the controversial land lease law last year and earlier this year, surprisingly showed strong price decreases except for the Akaki-Kaliti industrial district, whose prices remained stagnant.
However, this price stabilization was not reflected in the price of residential home sales and rentals for G+1 houses, calculated for the same period with on average double-digit price increments observed, which is sure to unnerve Addis Ababa’s large renter population.
The Access report data had a largely negative or static report in the wage and salary category, with wild price swings observed in the construction sector. In the professional sectors, no change was registered and salaries for service sector jobs varied between a 20 percent and 17 percent decrease.
Based on the above mentioned data, the report calculated that a year-on-year inflation rate of nearly 11 percent was recorded for the 184 items covered in its city-wide survey. This inflation estimate is somewhat lower than the 15 percent year-on-year inflation reported for Addis Ababa by the Central Statistical Agency (CSA) for October 2012.
The main source of the dissimilarity seems to have arisen from food prices, where the survey showed a year-on-year food inflation rate in Addis Ababa at 10.1 percent versus the 17.5 percent year-on-year food inflation rate reported by the CSA.
Price increase moderation forecasted for the next quarter
The Access research report also had a segment on the statement for price prediction for the next quarter report ending January 2013, with a moderate increase in teff price, while other essential food items like injera, milk and table salt are expected to show no change in price. , other items such as green peppers, onions and tomatoes are expected to show double-digit price decreases.
It also forecasted double-digit price increases for livestock, and construction and building materials were predicted to show negligible to no change, the same as construction machinery and vehicle rentals. A crucially similar situation was expected for fuel, water and energy price tariffs as well as urban land lease and residential home sales and rental prices.
The survey reveals an expected continuation of price increases for only 22 percent (or 40 out of 184) of surveyed commodities and services.