Rwanda’s annual inflation is expected to remain fairly stable at 6 percent by September 2010 on account of continuing good performance in national food production, according to Central Bank projections.

During the second quarter of 2010, Rwanda experienced a slight increase in inflation explained mainly by the seasonal shortage of fresh food products, while during the first quarter, the country recorded 3 successive months of quite stable consumer prices level.

For the 3rd Quarter, the forecasted annual headline inflation is expected to be maintained at a low level, the National Bank of Rwanda said in a statement.

Food production is the main driver of inflation in Rwanda.
"On annual basis, overall inflation rose to 5 percent in June 2010 from 2.1percent in March. By origin, it stood at 5 percent in June for locally produced consumer goods, against 1.6 percent for imported goods,” the statement reads in part.

Due to seasonal factor, prices of fresh food products were relatively higher during the second quarter 2010 and reached 14.7 percent in June on annual basis, the Bank said.

"Recent increase in oil prices on international market has been transmitted on local market, as during the second quarter 2010 energy index rose significantly and on annual basis, it reached 6.8 percent in June 2010 against 1.6 percent in March 2010.”

It is also expected that imported inflation would be maintained low and stable. World Bank global outlook of June 2010 projects inflation in leading economies (G-7) at 1.5 percent in 2010, while the manufacturing unit export value would remain unchanged.

After a short period of depreciation against the US dollar, the Rwandan franc is also expected to be stable, while the current appreciation of the national currency against EUR and GBP, as well as regional currencies would contribute to declining imported inflation.

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