Inflation drops to 6.95%

Rwanda’s annual inflation for the month of April eased to 6.95 per cent compared to 8.18 per cent the previous month, the National Institute of Statistics of Rwanda (NISR) said on Tuesday.The figure is the lowest since September last year.According to the figures released yesterday, urban inflation increased by 0.24 percent. “The change gives a general inflation rate by an annual average of 7.2% during the month of April 2012,” NISR said.The underlying inflation rate (excluding fresh food and energy) increased by 0.33 per cent compared to the previous month and increased by 4.80% on annual change.The institution attributed the change in Consumer Price Index to the increase in food and non-alcoholic beverages which contributed 0.41 percent and alcoholic beverages and tobacco which increased by 3.24 percent.“The increase of 0.41 in prices of food and non alcoholic beverages is primarily attributed to the increase of 2.03 of bread and cereals,” the statistics agency noted.For the underlying month, housing, water, electricity, gas and other fuels rose by 6.31 percent while transport contributed 3.32 per cent.The central bank vowed to contain the rate in a single digit of 7.5 per cent at the end of this year.Transport fares are likely to go up as a result of increased gasoline prices. On Friday, the Ministry of Trade and Industry announced an increase in pump price of petrol from Rwf 1,000 to Rwf 1,030 mainly due to high oil prices on the international market where the products increased by 7 percent since March. Diesel prices remained unchanged at Rwf1,000.KCB Rwanda’s Managing Director, Maurice K. Toroitich, said the increase in local pump price will certainly have an impact on inflation figures.“Fuel is a huge component in determining consumer price index; however, it will also depend on other factors which include imported food and materials,” Toroitich said.Rwanda’s inflation is still the lowest in the region compared to Tanzania’s 18.7 per cent, Uganda’s slowed to 20.3 per cent in April down from 21.1 percent the previous month, while Kenya’s rate slowed to 13 per cent in April from 15.61 in March.Burundi still has the highest inflation in the region, with year-on-year inflation rate standing at 24.5 per cent in March from 22 per cent a month before.“In 2011 Rwanda realised a growth rate of 8.6 percent driven by good a harvest and strong industry performance,” Amina Rwankunda, a Senior Economist at the Ministry of Finance and Economic Planning (MINECOFIN) says.“Successive increases in the central bank’s policy rate from 6 to 6.5 percent in October last year and to 7 percent in November allowed the central bank to continue limiting risks of monetary inflation.”Central bank statistics show that regarding regional currencies, the Rwanda Franc appreciated by 2.8, 0.4, 0.3 and 0.2 versus Kenya, Tanzanian and Ugandan shillings as well as the Burundi franc, respectively.However, the country is still challenged by low returns on exports which are expected to grow slowly by 1 percent yet the imports will increase by 14 percent by the end of 2012.Privates sector businesses are expected to respond to the investment needs by growing at 18.4 percent this year, thus playing a major role in ensuring that the economy stabilizes against the global economic difficulties.