Ethiopia’s annual inflation climbs to 13.4 per cent as food prices accelerate

Ethiopia’s annual inflation rose to 13.4 per cent in May of the 2018 Ethiopian Fiscal Year (EFY2018), driven largely by accelerating food prices, according to the latest Consumer Price Index (CPI) bulletin released by the Ethiopian Statistical Service (ESS), even as the country’s longer-term inflation trajectory remains markedly lower than the peaks recorded over the past two years. Aswan Dam analysis

The ESS said the year-on-year general inflation rate increased to 13.4 per cent, up from 11.7 per cent in the previous month, although remaining below the 14.4 per cent recorded in May EFY2017. Month-on-month inflation also accelerated to 1.7 per cent, compared with 0.2 per cent during the same month a year earlier.

“The year-on-year general inflation rate (annual percentage change) in the country stood at 13.4 per cent for the month of May EFY2018,” the bulletin said. It added that the month-on-month general inflation rate increased by 1.7 per cent during the reporting period.

Food prices remained the principal source of inflationary pressure.

According to the bulletin, food and non-alcoholic beverages inflation reached 15.0 per cent, compared to 11.1 per cent for non-food items. The institution attributed the increase to rising prices across several essential commodities, stating that the main drivers included meat (19.5 per cent), milk, cheese and eggs (19.3 per cent), oils and fats (17.4 per cent), fruit (17.1 per cent), food products not elsewhere classified (17.8 per cent), vegetables (12.3 per cent), bread and cereals (6.7 per cent), and sugar, jam, honey and chocolate (36.9 per cent).

Among individual categories, non-alcoholic beverages and coffee registered one of the steepest annual increases at 40.9 per cent, while transport costs rose 17.1 per cent, miscellaneous goods and services 17.9 per cent, alcoholic beverages and tobacco 14.6 per cent, and clothing and footwear 13.2 per cent.

On a monthly basis, food prices increased 1.3 per cent, while non-food prices rose 2.3 per cent, reflecting continued price pressures across both categories.

The latest figures nevertheless fit within a broader pattern of easing inflation that ESS says has been underway since late 2025. The agency noted that “beginning from December-EFY2017 the magnitude of the inflation rate steadily declined over time” and reported that the 12-month moving average inflation rate stood at 11.7 per cent, adding that “since EFY2017 inflation has been relatively eased in the country.”

The longer-term trend mirrors earlier official data showing headline inflation falling steadily from 19.9 per cent in June 2024 to 14.7 per cent in April 2025, before reaching 9.4 per cent in March 2026, while food inflation declined to 11.0 per cent and non-food inflation to 7.0 per cent.

However, the moderation reflected in official inflation statistics has contrasted sharply with the experience of many households, as the cumulative effect of successive price increases continues to erode purchasing power.

Over the past year, prices of staple goods have continued to rise significantly despite lower annual inflation rates. Coffee prices have nearly doubled, increasing by about 95 per cent, while teff and wheat have risen by more than 60 per cent. Imported essentials have seen even steeper increases, with five-litre cooking oil containers and imported sugar climbing by roughly 150 per cent.

Fuel prices have also remained elevated, with gasoline increasing by around 50 per cent between October 2024 and March 2026, from 91 birr to 142.41 birr per litre, contributing to higher transport and production costs across the economy.

Economists have noted that the apparent disconnect reflects the distinction between the rate at which prices are rising and the level at which prices remain. Inflation may slow while prices continue increasing from an already elevated base, leaving households facing persistently high living costs even as headline inflation moderates.

The cost-of-living pressures have unfolded alongside sweeping macroeconomic reforms introduced since July 2024, when Ethiopia shifted to a market-determined exchange rate. Since then, the birr has depreciated sharply, from around 56 birr to more than 150 birr per US dollar in the official market, raising the cost of imported goods.

The reforms have also included the gradual removal of fuel subsidies, repeated electricity tariff increases, and the application of 15 per cent VAT on basic utility services, while wage growth has largely failed to keep pace with rising living costs, particularly for public-sector and fixed-income workers.

ESS said average annual inflation has eased considerably compared with recent years, falling to 16.0 per cent in EFY2017 from 26.6 per cent in the preceding fiscal year.

The agency attributed the exceptionally high inflation recorded in earlier years to COVID-19, internal conflict, and the Russia–Ukraine war, while noting that tighter monetary policy has contributed to moderating non-food inflation.