July 12 (Bloomberg) -- Ethiopia’s inflation rate climbed to 38.1 percent in June from a year earlier as food costs increased and the central bank boosted the money supply.
Inflation accelerated from 34.7 percent in May, the Central Statistical Agency, based in the capital, Addis Ababa, said in an e-mailed statement today. Food prices surged 45.3 percent in June after rising 40.7 percent in the previous month, it said.
Drought in East Africa has pushed up food prices in the region, with 4.57 million Ethiopians requiring food aid for the rest of the year, State Minister of Agriculture Mitiku Kassa said yesterday. Money supply growth of as much as 40 percent has played a “significant role” in rising prices, Prime Minister Meles Zenawi said on July 5.
Inflation may undermine economic growth in Ethiopia, Africa’s largest coffee producer, the International Monetary Fund said on May 31. The economy will probably expand 6 percent in the fiscal year through July 7, 2012 from 7.5 percent in the past year, the IMF said.
Ethiopian authorities brought inflation down to 5.3 percent in August 2010 from a peak of 64.2 percent in July 2008. A 17.5 percent devaluation of the Ethiopian birr against the dollar on September 1 boosted import costs, pushing up inflation since then.
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