Declining food prices ease pressure on economy

Food commodity prices have dropped on the local market, easing recent fears of run-away food inflation. The country has witnessed a drastic rise in food prices over the last two months, driving the country’s overall inflation rate to 8.18 per cent in March up from 7.85 per cent in the previous month.Food and non-alcoholic beverages prices climbed by 4.37 per cent between February and March occasioned by a 10.55 rise in the prices of vegetables, according to figures from the National Institute of Statistics of Rwanda (NISR).However, food commodity prices witnessed a reduction at the end of last month with traders now projecting a further decline on the back of supplies from farmers due improved weather that is characterised by more rainfall.“We have been getting enough supply of vegetables and Irish potatoes due to the (improved) rains and this one has lowered prices, so when we get enough supply we reduce prices,” Jacqueline Mukanyandwi, a vendor in Kimironko market told Business Times.According to a mini-survey carried out by Business Times, a kilo of Irish potatoes fell from Rwf250 to Rwf200, vegetables Rwf100 from Rwf150, tomatoes to Rwf500 from 1000 while most fruits registered a decline of Rwf100. While red onions dropped by Rwf100 to Rwf1100 per kilo, white onions increased to Rwf2200. Some commodities saw a rise in prices while others remain unchanged. A kilo of rice increased by Rwf400 to Rwf1,200 at the start of March and maintained the price while maize flour rose by Rwf50 to Rwf450. Meat prices steadied at Rwf2,000 per kilogramme.“I am very happy that now I have cut down on my budget for food. It has been affecting my income especially the foodstuffs which is unavoidable,” bemoaned Albert Gabo, a consumer interviewed by Business Times.Food and drinks account for more than half of Rwanda’s overall inflation rate, meaning that any change in this (food and drink) index has a huge bearing on the purchasing power of consumers.Rwanda has witnessed a relatively low inflation rate compared to other regional countries, thanks to a coordinated approach to fiscal and monetary policy, which has ensured relatively low fuel prices and stable interest rates.The surge in food prices over in the last two months has been a top priority for policy makers. The Minister of Trade and Industry, Francois Kanimba, attributed the increase to last year’s dry spells which swept the region, increasing the country’s food exports to Uganda, Burundi and DR Congo. This led to a low supply to the local market yet demand remained high. “The main point is that the Rwandan market is looked at basing on regional performance…many food products especially those in the crop intensification programme increased in harvests but prices didn’t go down due to the dry season the region faced last year,” the Minister pointed out. The International Monetary Fund (IMF) projects that the country’s inflation for this year will increase due to uncertainties in the global economy.“While strong (local) agricultural output and exports are driving high real Goss Domestic Product (GDP) growth, aggregate demand pressures are also building up and have already pushed up (Rwanda’s) core inflation,” the IMF said in report early this year.The IMF also says that Rwanda is likely to maintain strong economic growth—projected at between 7.5 and 8 percent in the next two years.