Rwanda’s Consumer Price Index (CPI), the main gauge of inflation, increased by 14.8 per cent (on an annual basis) in May this year, compared to the same month last year, according to data released by the National Institute of Statics of Rwanda (NISR) on June 10, 2022.

The statistics suggest how prices of goods and services have risen, resulting in consumers paying more to meet their needs.

CPI is one of the leading economic indicators of inflation as it calculates the change in cost on a bundle of consumer goods and services [purchased by households] over time.

A higher sale price indicates a decrease in consumer purchases and a rise in inflation, according to NISR.

According to the International Monetary Fund (IMF), inflation is the rate of increase in prices over a given period of time. Inflation is typically a broad measure, such as the overall increase in prices or the increase in the cost of living in a country.

However, the NISR statistics indicated that Rwanda CPI increased by 2.1 per cent on a monthly basis (May 2022 to April 2022).

Urban CPI, which considers the average change overtime in the prices paid by urban consumers for a market basket of consumer goods and services, increased by 12.6 percent on an annual basis (May 2022 and May 2021) and increased by 1.9 percent on monthly basis (May 2022 to April 2022).  

On the other hand, the rural CPI, which focuses on the rural consumers, increased by 16.4 percent on an annual basis and increased by 2.3 percent on monthly basis.

In May 2022, prices of food and non-alcoholic beverages increased by 24.2 per cent on an annual basis and by 5 per cent on monthly basis.

Also, on annual basis, the local goods [price] index increased by 11.5 per cent, that of imported goods rose by 15.9 percent, that of fresh products (food products which have seasonal fluctuations) went up by 17.7 percent, while for the energy, its price index increased by 17.6 per cent.

On a monthly basis, the local goods index grew by 1.6 per cent, the imported goods index went up by 2.8 percent, the fresh products index rose by 3.1 per cent, while the energy index decreased by 1.3 per cent.

For housing, water, electricity, gas and other fuels, their prices increased by 8 per cent on an annual basis and decreased by 0.3 per cent on monthly basis. Transport prices went up by 7.7 per cent on an annual basis and increased by 1 percent on monthly basis.

Restaurants and hotels prices rose by 14.3 per cent on annual change and increased by 0.1 percent on monthly basis.

The data also show the prices of local goods increased by 11.5 percent on annual change and increased by 1.6 percent on monthly basis, while prices of the "imported products” increased by 15.9 percent on annual basis and increased by 2.8 percent on monthly basis.

Russia-Ukraine war, agric performance key price factors

While presenting the 2022/2023 national budget estimates to Members of Parliament on May 19, Uzziel Ndagijimana, Minister of Finance and Economic Planning, said that in the first nine months of 2021, inflation was low – averaging 0.7 per cent, mainly due to the low food prices that were a result of good agricultural harvest.

However, he indicated that prices started picking up in the last quarter of last year, such that in the first quarter of the current year, overall inflation climbed to 7.5 percent.

"This was mainly caused by the Russia-Ukraine war, which greatly disrupted the commodity supply chain and triggered the rise in prices globally, as well as the domestic increase in prices resulting from the negative climate change effects on agricultural produce,” he said.

In the entire 2022, Ndagijimana said, prices at the market are expected to go up by 9.5 per cent, but drop to 8 percent in 2023, largely because of the increase in global costs.