Rwanda’s urban consumer price index eased to 5% year-on-year in June, down from 5.8% in May, according to the National Institute of Statistics of Rwanda. This decline signals a moderation in inflationary pressures in urban areas, primarily driven by decreases in food prices. Rural CPI also saw a decline, decreasing by 1.4% on an annual basis and 0.8% from the previous month.
The decrease in urban CPI was largely influenced by the food and non-alcoholic beverages category, which rose by 3.1% year-on-year but fell by 1% month-on-month. This indicates that while food prices remain higher compared to last year, they have been falling in recent months, contributing to the overall easing of inflation. Transport costs, however, increased significantly by 23.2% year-on-year, reflecting higher fuel prices and transportation costs.
Month-on-month, the urban CPI for June 2024 decreased by 0.4% compared to May 2024, reflecting the easing in food and non-alcoholic beverage prices. The underlying inflation rate, which excludes volatile items such as fresh food and energy, increased by 5.8% year-on-year but showed a slight decrease of 0.3% month-on-month. This suggests that core inflation remains relatively stable, although it is slightly higher than the overall CPI.
The annual average inflation rate between June 2023 and June 2024 stood at 7.7%, indicating that inflationary pressures have been relatively persistent over the past year. The annual average underlying inflation rate was 6.7%, reflecting a steady rise in prices excluding fresh food and energy.
On an annual basis, the local goods index increased by 3.8%, while the imported goods index rose by 9%. The higher increase in imported goods prices highlights the impact of global inflationary pressures and exchange rate fluctuations on Rwanda’s economy. The fresh products index saw a moderate increase of 3.2%, while the energy index rose by 3.7%. The core index, which excludes fresh products and energy, increased by 5.8%, indicating sustained inflationary pressures in the broader economy.
On a monthly basis, the local goods index decreased by 0.2%, and the imported goods index fell by 0.7%. The fresh products index saw a slight increase of 0.1%, while the energy index decreased by 2.3%. The core index decreased by 0.3%, reflecting the overall easing in prices excluding the more volatile components.
The moderation in inflation is a positive sign for Rwanda’s economy, suggesting that efforts to control price increases are beginning to have an effect. However, the significant rise in transport costs remains a concern, as it could offset some of the gains from lower food prices. Additionally, the persistent rise in underlying inflation indicates that there are still inflationary pressures that need to be addressed.
Looking forward, Rwanda’s economic outlook will depend on various factors, including global economic conditions, exchange rate stability, and domestic policies aimed at maintaining price stability. The government’s continued focus on enhancing agricultural productivity and improving supply chain efficiencies could help mitigate food price inflation, while efforts to stabilize fuel prices and transportation costs will be crucial in managing overall inflation.
The annual average inflation rates suggest that inflationary pressures have been relatively persistent, highlighting the need for ongoing efforts to maintain price stability and support economic growth.
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