Municipal officials in Awassa town, the seat of Southern regional state 276Km south of Addis Abeba, have decided to fix prices on consumer goods and are determined to enforce it.

A meeting was called for at the town's municipal hall on March 21, 2008, where 500 attendees from 250,000 residents of the town, representatives of businesses and leaders of chamber of commerce of Awassa participated. Administrators announced that they would fix and control prices in order to fight inflation. This is a move contrary to what Prime Minister, Meles Zenawi, told Parliament two weeks ago, in response to Bulcha Demekesa's (MP-OFDM) concern that no country in the world has been able to succeed in controlling prices.

"Price control never worked anywhere," Bulcha said in Parliament. "Not in Egypt, Benin, or India. Let's not waste our time tyring to control prices; rather, let's focus on creating a competitive environment."

Although the Prime Minister responded by claiming that there would be no price fixing but this was a temporary measure in subsidising prices of basic commodities in order to bring prices down for the urban poor, officials in Awassa are already in hot pursuit of ways to control prices.

"A taskforce comprising members from the town's Chamber of Commerce and varies bureaus of the regional state surveyed the market and confirmed that there is no shortage of supplies," said Genalle Hidano, deputy mayor of Awassa. "Nevertheless, there are commodities that are not available on the market simply because they are being kept in warehouses."

This, the Deputy Mayor claimed, attributed to prices escalations in the town and inconsistent pricing: for instance, a quintal of corn was available in Awassa town for 260 Br in one place and 350 Br in another; while although a Pepsi plant in the region offers retailers a bottle for 1.60 Br, there were stores selling the product from three to five Birr. Getahun Tsegay, sales staff at MOHA Soft Drinks Industry in Awassa, disclosed to Fortune that his plant distributes a case of Pepsi, comprising 40 bottles, for 40 Br on wholesale price.

Deputy Mayor Genalle blamed speculative business people for an alleged cartel activity aimed at raising and fixing prices after exchanging information through mobile calls. Residents claim that a quintal of corn bought from Awassa agricultural centre for 260 Br is sold on the market from 350 Br to 450 Br.

Indeed, prices are going up in the southern region, as it is the case across the country. Nevertheless, it has one of the lowest and below national average in its year on year Consumer Price Index (CPI). According to inflation data released this month by the Ethiopian Statistics Agency (ESA), year-on-year inflation in the south in February 2008 was 17pc, as opposed to the national average of 22.9pc or the highest - Benshangul Gumuz Regional State - of 37pc.

Fixing prices in Awassa appears to be work in progress, however, the town's officials decided during their meeting that shops in town should sell a bottle of Pepsi for two Birr.

"We may take shop owners who refuse to comply to court, or even shutdown their shops," Genalle threatened, during the meeting.

It is a move far from being unpopular, judging from the frequent applauds that echoed in the meeting hall.

"I believe it is a belated move," Zerihun Ayele, a resident in Tabor District of Awassa, told Fortune. "It could, however, stop the discontented public in Awassa from staging an open protest."

Ellisi Baru is another resident in Mehal District of the town, Kebelle 03, who was bitter about the rising cost of living. She said there are many parents who did not want to be at home when their children came home from school, for they could not stand the shame of being unable to feed them.

"We live in a pungent land and have a dreadful life," Ellisi told Fortune.

Sources at the municipality disclosed to Fortune that officials will finalize their survey of prices and introduce what they will fix in two weeks. In the meantime though, officials have begun controlling, a move residents say has brought prices down. There is a reduction of one to two Birr on consumer goods such as macaroni, pasta, salt and cooking oil, according to Wagaye Zewdie, a teacher in Awassa.

Members of the business community in Awassa have mixed feelings: although they accept price fix and control on consumer industrial goods such as cooking oil, soap and beverages, they see it as unfair when it comes to grains. They argue that similar measure should be taken on farmers.

"The reason why prices are up continuously is because farmers are increasing it," said Tesfaye Ambo, a grain trader in Awassa. "For instance, we buy first grade teff from Minjar for 560 Br before we sell it for 620 Br, to cover our overhead costs. I don't see how this is considered as being too high."

His is not a lone voice. Fassil Araya, head of the secretariat of Awassa Chamber of Commerce and Sectoral Association, advised the government to respond to the upward movement of prices from the source, at the farming level.