August 25, 2021

Prices keep soaring: Inflationary pressure squeezes city residents

City: Addis AbabaEconomySociety

As prices of food items and other basic commodities mount steadily, residents across the country are facing the onslaught of rising prices.

Avatar: Solomon Yimer
By Solomon Yimer

Solomon is a content editor at Addis Zeybe. He has worked in print and web journalism for six years.

Prices keep soaring: Inflationary pressure squeezes city residents

As prices of food items and other basic commodities mount steadily, residents across the country are facing the onslaught of rising prices and are witnessing a sharp dent in their monthly spending capabilities. 

Over the past couple of months, the price of food items is rising and we find it hard to afford living costs, says Almaz Arage, a mother of four, who Addis Zeybe met at Shola market in Addis Ababa. She added her monthly spending has almost doubled compared to the past two months.

According to Almaz, the prices of edible oil, onion, red pepper, and other basic consumer commodities rose significantly. Two weeks ago a kilo of onion was 20 birr, but the price jumped by 50% last week to 30 birr.

A liter of edible oil was sold at  100 birr a month ago, but as of last week it is sold between 130 birr and 145 birrs, Addis Zeybe witnessed. Traders, Addis Zeybe talked to, believe that conflicts in the northern and other parts of Ethiopia are reasons for the price hike.

I think there is a supply shortage of vegetables and commodities that are sourced from some parts of the country, where conflict is spreading, said Shifa Nasir, a businessman working at  Shola Market. 

Abdu Mohammed, a father of two and works as a school teacher, says he finds things challenging to feed his family due to the rise in food and basic commodities. He earns a monthly salary of 7,000 birr, of which 4,500 birr is spent for house rent.

“I’m literally trying to feed my kids with the remaining 2,500 birr,” he said. His spouse works as a  waitress at one of the cafeterias in the city, however, her earnings do not cover anything beyond her college fees.

Headline inflation has been swinging between double digits over the past couple of years, however, the pressure intensified over the past two years after the rate jumped over 20%.  Inflationary pressure has been one of the severe economic woes over the past decade and a half making Ethiopia home to one of the top 10 inflationary economies in the world.

Last month, Ethiopia registered a 10-year record in food inflation.  Headline inflation, the measure of the cost of living, continued to soar, reaching 26.4% in July 2021. According to the Central Statistical Agency (CSA), food inflation has increased from 28.7% to 32% while non-food inflation stood at 19%. 

Though food inflation contributed to the higher inflation rate, non-food inflation especially the rise of house rent fees has also added to the woes of households, Firehiwot Yaye, a civil servant in Addis Ababa who earns a 5,000 birr net monthly salary, is one of the victims of the. She was asked to pay an additional 500 birr recently for the house she rented for 2,000 birr. She tried to negotiate, but her landlords refused to reconsider their decision. 

“The inflation is affecting residents like me with constant monthly salaries,” she said, adding that the surge in prices of commodities and other costs are prompting consumers to cut expenses. 

“Until last month I and my colleagues were eating lunch at a  restaurant near our office but this time we all were forced to bring our lunch boxes,” said Firehiwot.

Ashagre Belay, a 34-year-old barber in the town of Debre Tabor, in the South Gondar zone of Amhara regional state, is also affected by the latest conflict in the country. His customers are not visiting his shop, following the expansion of the Tigray conflict to the town posing a challenge to him to feed his three children.

“As the conflict is expanding, things are getting tough and it’s damaging our business,” Ashagre told Addis Zeybe in a phone interview.

“Most of the residents are displaced to the nearby towns fearing that the conflict will get worse, and it has been three weeks since I opened my shop,” he said. “We’re now consuming our savings.”

In addition to the conflict, the federal and regional authorities announced that hoarding and unjust price increases are additional reasons for the inflation rate rise. Last week the deputy mayor of Addis Ababa warned to take “decisive measures” against “economic sabotages”  the city.

Adanech Abiebie emphasized that the city administration will take irreversible actions against those who allegedly create man-made supply shortages,  unjustly increase prices,  and create economic distortions to disrupt the stability of the economy.

"A task force comprising the federal government and the city administration has been established to oversee and monitor such sabotages," she announced. She also urged residents to work with the task force by reporting and exposing the institutions and individuals who are participating in the alleged illegal activity.