Rwanda’s annual average inflation rate increased by 1.12 percentage points, from 6.64 per cent in the month of September to 7.76 per cent in the month of October, according to the National Institute of Statistics of Rwanda (NISR).
The NISR’s Consumer Price Index (CPI) report, which indicates changes in the price levels of goods and services purchased by households, attributes the increase to the rise in prices of food, non-alcoholic beverages, housing, water, electricity, gas and other fuels. The report was released on Monday.
The October inflation figures becomes the highest the country is experiencing this year.
Central bank forecasts inflation rate of between 8 and 8.7 per cent by the end of the year.
According to the central bank, Rwanda has managed to contain inflation rate in single digits on account of improved coordination of fiscal and monetary policies.
Although the country has the lowest inflation rate in the region, economists say that the rate at which it is rising is bound to further reduce business activity.
“The increase in inflation rate is bound to reduce the purchasing power of our customers and consequently reduce our business,” said Dharma Rajan, the Managing Director SULFO, a manufacturing company.
He noted that, for their employees, as anybody else, the stubbornly rising inflation will make it more difficult to make ends meet.
The Managing Director of Inyange Industries, Rama Kant Pandy, told Business Times, that inflation affects everyone but there should be no panic.
Last month, the central bank reduced its key repo rate—at which it lends to commercial banks—by 50 basis points to 6.5 per cent in order to discourage too much lending, a move that aimed at containing inflation.
“The figures have increased slightly, we don’t expect a big change because the changes were projected and the country is still in a better position compared to the neighbouring countries,” Rao g. Balivada, the Managing Director of FINA BANK, said downplaying concerns that the rising inflation would cause a big impact on the market.
He further noted that the central bank has done a tremendous job in restraining inflationary gaps by stabilising the Franc, which places the country’s imports in a better place.
According to NISR, prices of local goods increased by 7.19 per cent on annual change, with a monthly change of 0.84 per cent, while prices of imported products increased by 10.08 per cent on annual change with a monthly change of -0.41 per cent.
The prices of fresh products had a positive annual change of 2.71 per cent between October 2010 and October 2011.