The announcement by the National Institute of Statistics of Rwanda (NISR), that the country’s inflation rate for the month of November fell to 7.39 percent, down from 7.76 percent, is a relief to household budgets, especially as the festive season approaches.
The drop in the Consumer Price Index (CPI)—the official measure of inflation, means that prices of some goods and services will drop.
Throughout the year, inflation has been one of the biggest policy challenges for the Central Bank and the Treasury, especially given that regional countries like Uganda and Kenya, Rwanda’s largest trade partners, faced high inflationary pressures.
Moreover, the country managed to maintain relatively low inflationary pressures compared to her counterparts in the East African Community, thanks to the National Bank of Rwanda (BNR), which periodically scrutinised market trends to determine interest rates.
It raised the key repo rate twice since October this year to 7 percent in November, up from 6 percent.
This coupled with the government’s sound fiscal policy ensured stable fuel and food prices on the local market.
Although the Central Bank projects a single digit inflation rate ranging between 8 and 8.7 percent by the end of the year, policymakers need to continue monitoring market trends to ensure that the economy is cushioned against external economic shocks. This will require relentless policy coordination between the Central Bank and government.
The government must also continue to support the agricultural sector to ensure food security and increase investments in the energy sector. Food and energy prices are some of the main drivers of inflation.