Rwanda: Inflation Eases Ahead of Festive Season

The increase of consumer prices on Rwanda’s market has eased, reaching 9.2 per cent in November, the first-time inflation has fallen below double digits in 2023.

Inflation is the pace at which prices of consumables increase on the market year on year and on a monthly basis, it is calculated based on approximately 1,622 products in 12 urban centres of Rwanda.

In November 2022, it reached its highest peak at 21.7 percent before starting a decelerating trend since the beginning of 2023, to round at 9.2 percent in November 2023, a decrease from 11.2 percent in October.

This comes ahead of festive season where it is generally known that consumer spending increases and prices are also hiked.

Data from National Institute of Statistics Rwanda (NISR), on November 10, showed that prices of foodstuffs and non-alcoholic beverages increased by 17.5 per cent, bread and cereal prices rose by two per cent, meat prices by 11.7 per cent, milk, cheese, and eggs by four per cent, and vegetables by 22.5 per cent.

The cost of housing, water, electricity, gas, and other fuels increased by 2.4 per cent, transportation rose by 8.3 per cent, while prices in restaurants and hotels increased by 6.4 per cent.

Mainly driven by poor agriculture performance across seasons over the past two consecutive years and imported inflation from external markets, food prices recently eased on the market, as reflected in staple food prices like Irish potatoes and sugar.

It is understood that prices of potatoes known as Kinigi declined from Rwf1,200 per kilogramme to between Rwf500 and Rwf550 on market while the other type is costing Rwf300 per kilogramme.

Besides the slight fall in food prices, Rwanda Utilities Regulatory Authority (RURA) has revised down fuel prices where the maximum pump price for gasoline (premium motor spirit) is set at Rwf1,639 per litre down from Rwf1,822 announced at the start of October, and the retail price for diesel (automotive gas oil) set at 1,635 per litre down from Rwf1,662.

Overall, the decline is attributed to the monetary policy tightening, government-incentivised measures, and falling prices of major international commodities.

With the National Bank of Rwanda maintaining the key repo rate at 7.5 percent in continued efforts to tame inflation and observation from global economic trends, economists expect it to further ease in 2024, subject to agricultural performance and geopolitical climate.

The central bank targets an acceptable inflation rate between two per cent and eight per cent, and project it to be at an average of 7.6 per cent at the end of 2023 (December figures) and to average around five per cent in 2024.

At the global level, inflation is projected to reach 6.9 per cent at the end of 2023 and 5.8 per cent in 2024.