WASHINGTON: Rwanda’s economy is currently facing rising inflation of up to 8.1% according to recent figures released by the national institute of statistics (NISR). According to the NISR figures, last month, the country experienced a rise in prices of household and basic goods and services. ‘Food and non-alcoholic beverages’, ‘Housing, water, electricity, gas and other fuels’ and Transport rose by 17.6 percent, 2.1 percent and 8.3 percent respectively.
The Consumer Price Index (CPI) is a key determinant of the level of inflation in an economy and is calculated by taking a household “basket of goods” and comparing the value of these to a previous period. When Rwanda Utilities Regulatory Authority (RURA) announced new fuel pump prices in January 2017- (Petrol rose from Rwf 970 per liter to Rwf 948 while diesel increased to Rwf 932 from Rwf 914) the effects were mostly felt later in February. For example in February the retail price of Beer per bottle increased by Rwf100 across all brands including other non alcoholic beverages. The NISR data also shows the “local goods” increased by 7.9 percent on annual change and increased by 1.3 percent on a monthly basis, while prices of the “imported products” increased by 8.8 percent on annual basis and increased by 0.5 percent on a monthly basis. Meanwhile, prices of the “fresh products” increased by 20.1 percent on annual change and increased by 2.9 percent on a monthly basis. Inflation rate and the CPI have a direct impact on the forex markets – Thus for forex traders, rising inflation is seen as an indicator that there is surplus money in the economy which the central bank, or interest rate decision-makers will try to reduce.
