Rwanda’s annual inflation rate has remained stable, slightly increasing by 0.18 percent in November compared to 0.17 percent in the previous month, according to the National Institute of Statistics (NISR).

The institute said in a statement that underlying inflation rate, which excludes fresh food and energy increased by 0.68 per cent compared to the previous month, and increased 0.49 per cent on annual change.

General prices of goods and services have decreased significantly since last year, falling from 5.7 per cent in December 2009 to 0.2 percent in October, this year, increasing possibilities of a deflation.

However, in a recent interview with Business Times, François Kanimba, the central bank Governor, ruled out the possibility of the economy plunging into deflation that could reduce consumer demand.

"The current assessment of the factors behind low inflation is generally different from those that drive a deflation process. The declining prices of imports are a big explanation of what is happening,” Kanimba said recently.

He explained that a general decline in imported inflation and increased productivity in the agricultural sector has been the fundamental factor behind low inflation.

Good performance in agriculture has contributed to the general decline in prices of foodstuff which comprise the largest share of Consumer Price Index (CPI).

According to the Governor, prices of imported goods from the East African Community (EAC) have also fallen with enhanced regional economic integration following the implementation of Common Market.

The NISR said that the rise in the consumer prices index of 0.70 per cent is attributable primarily to the increase in food and non-alcoholic beverages, and transport which increased by 1.41 per cent and 1.68 per cent respectively.

The rise in prices of food and non-alcoholic beverages is a result of the 3.74 per cent rise in prices of bread and cereals, the agency said.

According to the national statistics body, the ‘local goods’ decreased by 0.24 per cent on annual change with a monthly variation of 0.7 per cent, while prices of the imported products increased by 1.94 per cent on annual change with a monthly change of 0.68 per cent.

Prices of the fresh products had a negative annual change of 2.72 percent between November 2010 and November 2009.

This year’s low inflationary pressure is expected to enhance economic growth, with the economy expected to expand by 7.2 percent.

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