Weaker-than-expected food supply and depreciating currencies are expected to push up prices of basic commodities in East Africa.
The cost of living among East African households is projected to rise over the coming months also as a result.
Latest data shows that East African countries, save for Rwanda, recorded increases in the prices of goods and services during the six months to June, largely fuelled by increased food and fuel costs.
East Africa’s annual average inflation is forecast to rise to 3.9 per cent this year and 4.8 per cent in 2020, from 3.6 per cent in 2018, blamed on unfavourable weather conditions that led to late planting in some countries.
According to the National Bank of Rwanda, food prices started rising in April as a result of the prolonged drought, which impacted the planting seasons of several East African states.
During the period, a survey carried out by the NBR shows that over 70 per cent of the firms sampled in Rwanda increased prices for their goods.
Governor John Rwangombwa said inflation in Rwanda is expected to rise to three per cent this year due weaker local currency, uncertainties around Brexit and global trade tensions.
According to Mr Rwangombwa, the Rwandan franc is expected to depreciate slightly this year due to a widening trade deficit occasioned by a high import bill attributed to ongoing infrastructure projects and a slowdown of the global economy.
The region’s weakening currencies pose a risk to the inflation outlook because they make imports more expensive and these costs are usually passed on to consumers.