Food and non-alcoholic drink prices fall 1.97 pct

KIGALI - Consumer prices in Rwanda fell 1.20 percent month-on-month and 2.22 percent year-on-year in July, compared with year-on-year inflation of 1.98 percent in June, official data showed on Tuesday.

Prices of food and non-alcoholic drinks, the component with the biggest weight in the central African country’s consumer price basket, fell 1.97 percent, the National Institute of Statistics of Rwanda (NISR) said.

Housing, water, electricity, and other fuel costs declined 0.63 percent. The headline inflation rate has fallen steadily from a peak of 22.3 percent in December 2008.

Last month, the country’s central bank left its repo rate unchanged at 7.0 percent, saying inflation was low and there was sufficient liquidity in the banking system.

”The underlying inflation rate excluding fresh food and energy, is decreased by 0.73 percent if compared to the previous month and increased 1.10 percent on annual change. The annual average underlying inflation rate increased 2.8 percent in July 2010 down from the previous month,” said a statement.

"It should be noted that the decrease of 1.97 percent in prices of food and non-alcoholic beverages is primary attributed to the decrease of 3.98 percent of bread and cereals,” the statement added.

Rwanda’s headline inflation rate has fallen steadily from a peak of 22.3 percent in December 2008. The National Bank of Rwanda said a week ago that it expected the figure to remain fairly stable at 6 percent by September 2010 on account of continuing good performance in national food production.

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 National Bank of Rwanda said.

NBR also said that it 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.

Like Kenya, Uganda and Tanzania, inflation rates in Rwanda have been slowing gradually over the past year and expectations of better harvests have improved the inflation outlook even though economic growth is now picking up.

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