INFLATION UPDATER—April 2009
• Recently released data from Ethiopia’s Central Statistical Agency confirm that inflation—
which fell to 23.7 percent in March 2009—remains on a clearly downward trend.
• We can now forecast with a fairly high degree of confidence that inflation (on a year-on-
year basis) will be just under 5 percent by June 2009, the end of Ethiopia’s fiscal year.
However, on a year-average basis (comparing average price levels in the last 12 months to
those in the prior 12 months), we see inflation remaining at a still high rate of around 37
percent by year-end.
• The latest inflation reading bodes well for the economic and business outlook in the two
areas—credit and foreign exchange—where the private sector has been feeling a squeeze
for quite some time.
April 2009
Access Capital Research
Inflation Updater—April 2009
The latest inflation data release from Ethiopia’s Central Statistical Agency shows that (year-on-year) inflation has
declined to 23.7 percent in March 2009. This measure of inflation is now nearly a third of its peak of 64 percent registered
last year and also marks the eight consecutive month of falling year-on-year inflation (Figure 1).1
An even more welcome part of the latest
data release is that year-average inflation
has begun to fall for the first time in
some 14 months. Year-average inflation
compares average price levels in the most
recent 12 months to those in the prior 12
months (and thus rises rather slowly in a
period of fast-rising prices while also
tending to fall only gradually once prices
begin to stabilize). By this measure,
Ethiopia’s inflation had been rising
continuously since end-2007 (even after
other inflation measures had started falling
for many months) and reached a peak of 46
in February 2009. For the first time in more
than a year, however, year-average inflation
fell—to 44 percent—in March 2009. That
such a turning point has been registered is
signific