Focus Media (Kigali)
21 October 2008
Rwanda's annual inflation has reached 20% on the back of high commodity prices, the government said on Tuesday, its highest rate in five years. Coffee prices on the international market, on the other hand, have dropped sharply.
"Our inflation level currently stands at 20%. It has been increasing since January when it was 13%," said John Rwangombwa, treasury secretary at Rwanda's Finance Ministry.
"This is mainly due to international pressures which are brought about by high prices of food and fuel which have affected all sectors of our economy," he told Reuters.
Yet recently, government moved to tackle fast-rising fuel prices and imposed a 4.7% price reduction on all fuel products.
Central Bank governor François Kanimba also blamed high global commodity prices for the soaring inflation. "The economy is heavily dependent on imports, and global prices of many raw materials have increased due to higher demand from India and China," he told media.
Meanwhile, Rwanda's coffee prices have fallen 23% in the last month, according to Alex Kanyankole, managing director of the Coffee Marketing Board, OCIR CAFÉ. He added that the country will have a lower-than-expected harvest of 23,000 tons this year.
"We have noted with concern a drop in prices of commercial coffee in the last few weeks," he said, pointing out that a pound of coffee is selling for $1.17 compared with $1.53 per pound in the pre-crisis period.
Prices in other regional coffee markets including Nairobi and Bujumbura, have also taken a hit from the crisis, falling routinely after drops in the New York market. About 20% of Rwanda's coffee is exported to the United States, Kanyankole said, adding the country is focusing on specialty production to shore up earnings.
"The strategy is to concentrate on quality production, which will continue to secure quality prices and premium," he said.
Rwanda had hoped to more than double coffee output to 29,000 tonnes in 2008 from 14,000 tonnes in 2007, but Kanyankole said the target is not attainable.
"It will come to about 23,000 tonnes which is short of our expectations because of seasonal variations and micro climates that did not stimulate production," he said.
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