Ethiopia's inflation squeezes family budgets as food prices rise

A woman counts Ethiopian birr notes, at the Mercato market in Addis Ababa November 14, 2015

A woman counts Ethiopian birr notes, at the Mercato market in Addis Ababa November 14, 2015. REUTERS/Tiksa Negeri

What’s the context?

The rising cost of household staples from teff flour to baby formula is forcing Ethiopian families to cut back on extras

  • Inflation remains above 30% despite recent dip
  • Families cut back on extras, switch meal choices
  • Government measures seen bringing patchy relief

ADDIS ABABA - Like many Ethiopian parents, Samson Berhane watches with alarm as the price of formula milk and other baby care essentials climbs relentlessly due to double-digit inflation.

"Each and every item I consume has increased ... the price of baby formula milk has risen by 300 birr ($5.57)," Samson, who has a nine-month-old daughter, told Context.

Annual inflation is running at more than 30% in Ethiopia, according to official statistics cited by economic data provider Trading Economics, putting it among a clutch of African nations with fast-rising living costs - from Ghana to Zimbabwe.

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While Ethiopia's inflation rate has slowed in the last few months, it has remained stubbornly high in recent years, fueled by drought, fallout from COVID-19 and a two-year conflict in the northern Tigray region that ended in November.

Shortages of teff, a grain used in many Ethiopian foods, have caused soaring prices in recent months, dealing another blow to the food budgets of low-income households.

Samson said a government decision to lift value-added tax on essential goods in September 2021 - one of a series of measures aimed at cushioning the impact of inflation - had brought little relief to cash-strapped families.

Farmers transport teff from their farm in the town of Woliso, Oromia region, Ethiopia, October 22, 2018

Farmers transport teff from their farm in the town of Woliso, Oromia region, Ethiopia, October 22, 2018. REUTERS/Tiksa Negeri

Farmers transport teff from their farm in the town of Woliso, Oromia region, Ethiopia, October 22, 2018. REUTERS/Tiksa Negeri

"This hasn't helped, since the only real access to foreign exchange for many importers is from the black market instead of official sources," added Samson, who works as a journalist at a local newspaper.

Africa's second-most populous country has long experienced foreign exchange shortages, and the black market exchange rate is far higher than the official rate listed at banks.

A senior official at the Finance Ministry did not immediately respond to a request for comment. Officials have said previously they are focused on lowering inflation and eliminating distortions in the foreign exchange market.

A view shows groceries at the Mercato open-air marketplace in Ketema, district of Addis Ababa, Ethiopia July 21, 2022

A view shows groceries at the Mercato open-air marketplace in Ketema, district of Addis Ababa, Ethiopia July 21, 2022. REUTERS/Tiksa Negeri

A view shows groceries at the Mercato open-air marketplace in Ketema, district of Addis Ababa, Ethiopia July 21, 2022. REUTERS/Tiksa Negeri

Economy cools

After more than a decade of sizzling growth, Ethiopia's economy has cooled in recent years. The economy is expected to grow by at least 7.5% in the year to July 2023, up from 6.4% last year, Prime Minister Abiy Ahmed said in November.

Daniel, who lives in the capital and has three children, said the slowdown - coupled with inflation and rising import costs - had stymied his small car spare parts sales shop business, forcing the family to cut back.

"My income from my business has largely stagnated," he said, asking to use a pseudonym to protect his identity.

"I've completely stopped taking my kids to entertainment spots," he said, adding that meat had been replaced by lentils and vegetables at meal times.

Since Mimi Tadesse, 50, a mother-of-two, was laid off from her job as an accountant about four months ago she has stopped buying meat, eating out and buying clothes for her daughters.

"At the end of every month we watch the news in dread of fuel price increases which in turn increase public transportation fares," she said, adding that most meals now consisted of injera - a pancake made from teff - with shiro, a chickpea stew.

"It's worse in other homes," she added. "I know many other homes where people only eat once a day."

In Tigray, where the Ethiopian government's two-year conflict with regional forces ended in November, civil servant Fisseha Hagos, 36, said he feared for the health of his two young children due to the family's meagre diet during the war - when food prices soared.

"We fear about the future physical growth of my kids," he said by phone from the regional capital, Mekelle, adding that while food prices remained high, they had come down considerably since fighting ended.

For Daniel, the small business owner, the only solace is a government ban on rent increases by landlords.

"(That) has been a net positive for me, but this alone won't save me from going totally under if current trends continue," he said.

($1 = 53.8752 birr)

This story has been updated to add reporter’s byline at his request.

(Reporting by the Thomson Reuters Foundation in Addis Ababa; Editing by Helen Popper)


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Tags

  • Consumer protection
  • Pay gaps
  • Wealth inequality
  • Financial regulation
  • Poverty
  • Cost of living

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