Addis Ababa, Ethiopia – Ethiopia’s annual inflation rate rose to 13.4% in May 2018, according to the latest Consumer Price Index (CPI) bulletin released by the Ethiopian Statistics Service (ESS). This compares to 11.7% in the previous month. The increase in inflation was primarily driven by rising food prices. However, the country’s long-term inflation trend remains downward. It is also significantly lower than the peaks recorded in the past two years.
Monthly inflation accelerated
The Office for Economic and Social Statistics (OESS) reported that monthly inflation also accelerated to 1.7%, compared to 0.2% in the same month of the previous year. According to the data, the inflation rate for food and non-alcoholic beverages reached 15.0%. Meanwhile, it stood at 11.1% for non-food items. The OESS attributed this sharp annual increase to rising prices for several basic commodities. It noted that the most significant price hikes included sugar, jam, honey, and chocolate (36.9%); meat (19.5%); milk, cheese, and eggs (19.3%); oils and fats (17.4%); and fruit (17.1%). Non-alcoholic beverages and coffee also saw record increases of 40.9%.
Discrepancies between official statistics and the suffering of citizens
Despite these recent figures, the statistics agency points to a broader pattern of declining headline inflation since late 2025. The rate fell steadily from a peak of 19.9% in June 2024 to 9.4% in March 2026. It has recently risen slightly again. However, this moderation in official statistics contrasts sharply with the experience of many Ethiopian households. The cumulative effect of successive price increases continues to erode purchasing power. Furthermore, the cost of living is becoming increasingly burdensome.
The cost of living remains high despite the slowdown in annual inflation.
Over the past year, commodity prices continued to rise significantly despite a slowdown in annual inflation rates. Coffee prices nearly doubled (an increase of approximately 95%). Teff and wheat prices also rose by more than 60%. Imported commodities saw astronomical increases. For example, cooking oil and imported sugar prices rose by about 150%. Fuel prices remained high, with gasoline prices jumping by approximately 50% between October 2024 and March 2026. Prices rose from 91 birr to 142.41 birr per liter. Consequently, this contributed to higher transportation and production costs across various sectors of the economy.
The impact of macroeconomic reforms on purchasing power
Economists point out that this apparent contradiction reflects the discrepancy between the rate of price increases and the level of price stability. Inflation is slowing, while prices continue to rise from an already high level. As a result, households face consistently high living costs. These cost-of-living pressures have been exacerbated by the comprehensive macroeconomic reforms initiated by the government in July 2014. These reforms included a shift to a market-determined exchange rate system. This has led to a sharp depreciation of the Ethiopian birr, from approximately 56 birr to over 150 birr per US dollar in the official market. Consequently, the cost of imported goods has increased.
Government efforts to control inflation amid ongoing challenges
The reforms also included the gradual removal of fuel subsidies, repeated increases in electricity tariffs, and the application of a 15% value-added tax (VAT) on basic utilities. Meanwhile, wage growth failed to keep pace with rising living costs, particularly for public sector employees and those on fixed incomes.
However, the ESS reported that average annual inflation fell significantly to 16.0% in fiscal year 2017 from 26.6% in the previous fiscal year. It attributed the previously high inflation to the COVID-19 pandemic, internal conflict, and the Russia-Ukraine war. It also noted that tighter monetary policy had helped to curb inflation in non-food items.
