Rwanda’s year on year inflation rate eased further to -6.52 percent last month from -5 .38 percent in November,  on account of  a decrease in food and non-alcoholic prices, which constitute the majority of the Consumer Price Index (CPI).

According to statistics released by the National Institute of Statistics of Rwanda (NISR), the food and non-alcoholic beverages index dropped by 12.21 percent in December as prices of bread and cereals eased by 14.03 percent and vegetable prices fell by 17.15 per cent.

"There is no surprise, inflation in 2010 was less than 1 percent,”  Francois Kanimba, the central bank Governor told Business Times in an interview last week.

The annual average underlying inflation, which excludes fresh food and energy, cooled to 1.5 percent in December 2010, down from 1.8 percent the previous month.
Generally Rwanda has been experiencing low inflationary pressure since December 2009. This is expected to boost economic growth to above last year’s 7 percent.

However, projections by the International Monetary Fund (IMF) suggest that the country’s inflation rate will rise sharply to 6 percent this year, mainly driven by a rebound in economic activity, credit growth and recovery of external demand.

Kanimba said he also expected an increase in local food prices and increasing oil prices to contribute to the drastic increase in prices.

"We expect the recent bad weather conditions to have an impact on food prices; rainfall has not been regular and agricultural production has not been as expected. This will have pressure on food markets. Oil prices are also climbing,” Kanimba said.

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