Africa

East Africa Facing Rise in Cost of Living due to Increasing Food and Energy Prices, UN Data Shows

Central Bank of Kenya (CBK) Governor Patrick Njoroge displays some of the new look shilling Kenyan currency notes on June 3, 2019 during a press conference at his office in Nairobi.The effects of the global food and energy crisis as well as climate change threaten African development by having a negative impact on real incomes and food security.The median inflation rate in East Africa has almost reached 9% in recent months, according to data published by the United Nations Economic Commission for Africa (UNECA). The changes are attributed mainly to rising food as well as energy prices.Rwanda has faced the most drastic increase in inflation, going from -3.2% in September last year to 23.9% this year. To contain inflation, the National Bank of Rwanda recently made the decision to increase its lending rate by 50 basis points, from 6.0% to 6.5%.Burundi comes in second place with a rise to 20.9% from 10.5%, while Uganda is at 10.0%, up from 2.2%. According to Ugandan Finance Minister Matia Kasaija, as cited by media, inflation will not reach a level that requires paying stipends because of the increased rain in the past three weeks. This is expected to enhance the production of maize, beans, cassava, and other crops.“Yes, the cost of living may still be very high. We may not grow as before, but the people will not starve,” he stated.The increase in inflation in Ethiopia is more subtle, with 34.7% overall, up from 30.7% last year. Kenya’s index was at 6.9% in September last year and 9.2% at the same time this year. With inflation in the country reaching 9.6% in November, Kenya’s National Treasury Cabinet Secretary Prof. Njuguna Ndung’u expressed the government’s concerns, albeit remaining silent on the possibility of short-term financial interventions.

“In the short term, there is little that can be done about weather-induced domestic inflation and the resulting low agricultural production. Maybe if things get worse, the government may have to control prices and subsidize some essential food items to maintain consumption at a certain level and avoid other social problems…” said Mama Keita, the director, of the Sub-Regional Office for Eastern Africa of UNECA.

Recently, the UN stated that it expects the global food import bill to jump to a record $1.9 trillion, noting that sub-Saharan Africa is expected to become increasingly vulnerable in terms of food security.The global food crisis has been linked to the Russia-Ukraine conflict. Russian President Vladimir Putin, as well as some African leaders, previously pointed out that no more than five percent of the crops under the so-called Black Sea “grain deal,” designated to tackle the crisis, were reaching the poorest countries, with almost all of the Ukrainian grain being sent to the EU.

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