Ethiopia: Rising inflation remains key concern

Ethiopia’s Prime Minister Abiy Ahmed recently addressed the parliament, outlining the country’s economic outlook for 2021. While projecting a 9% growth rate for the economy, he acknowledged the pressing issue of rising inflation, which increased from 19.8% in May to 24.5% in June. Zemedeneh Negatu, Global Chairman at Fairfax, shed light on the contributing factors to inflation during an interview with CNBC Africa. Negatu highlighted the imbalance between demand and supply, accentuated by the country's population growth and urbanization. Additionally, imported inflation, coupled with surging oil prices, has added strain to the economy. The government has taken steps to address inflation, including ceasing the practice of printing money and focusing on local production. However, Negatu emphasized the need for modernizing the retail distribution system to alleviate inflationary pressure as household expenditure on housing and food remains high.