The National Bank of Rwanda (BNR) has done a superb but difficult job – bringing down inflation on a path that the country desires. This target, according to BNR, should be 2-8 per cent. This ensures that the level at which prices of goods and services change within a certain period of time is predictable and sustainable. When last year began, inflation was at an all-time high. It was 20.7 per cent in January 2023, then 20.8 per cent the following month, before starting to decline to 19.3 per cent in March 2023 and all the way to 6.4 per cent at the end of December. On average, the annual inflation rate was 14.3 per cent in 2023. This means that prices for things people buy every day went up faster than they have in previous years. This had a negative impact on household budgets and put pressure on operations of different companies. For example, the average price of bread and cereals, vegetables, and fruits increased by 16.3 per cent, 52.3 per cent, and 28.6 per cent in 2023, respectively, according to the National Bank of Rwanda. The year before that, the average price of bread and cereals, vegetables, and fruits had increased by 24 per cent, 33.3 per cent, and 21.7 per cent, respectively. The decline in inflation to 4.9 per cent last month is commendable and the Central Bank should be given due for fulfilling its mandate in times when the entire world is struggling with wars such as one in Ukraine and Israel, as well as coping with climate shocks. But the fight is not over. Although the Central bank has managed to bring back inflation to acceptable levels, a key concern remains at how fast it can stabilize the Rwandan franc which lost its value by 18 per cent last year. The Central Bank Governor noted during the Monetary Policy presentation that there are still risks that could devalue the Rwandan franc even further, which gives BNR a major responsibility. Restoring price stability will also restore confidence among the public.
