Rwanda: Inflation Spike – Consumers Tipped on Priority Spending

Food and commodity prices have been gradually rising over the past months, heavily weighing down purchasing power and to cope with the rise, economists advise the public to adopt a consumption habit of priority spending.

Currently, the inflation rate has surpassed the central bank’s upper bound of 8 per cent. By April, it had shored up to 9.9 per cent up from 7.5 per cent in March, according to the figures from the National Institute of Statistics of Rwanda (NISR).

Inflation is an increase in the level of prices of the goods and services that households buy. Its rise naturally impacts the population in that one spends more on basic food basket with the income most likely staying the same.

Straton Habyarimana, an economic analyst says that to protect oneself from a deteriorating lifestyle as purchasing power continues to dip, “consumbers have to set up a priority list of essential commodities that are needed daily, and forgo the rest which they would unnecessarily buy at high prices.”

Take sugar as an example, he said, you can start developing a habit in your household of taking half the quantity or no sugar at all. “Things that have no additional value or you can live without can be put on hold.”

Besides that, he said that with fuel increase which has a crosscutting impact on the economy, people should learn how to consume it sparingly and familiarize themselves with alternative means of transport.

“For instance, walking where possible is also beneficial for one’s health,” he added.

Currently, the pump for petrol has increased to Rwf 1,359 per litre from 1,256 and Diesel was increased from 1,201 per litre to Rwf 1,368.

Diesel being the most used in different economic activities including public transport, industries and logistics in view of freight transporters across the country, it translates into the increase in cost of goods.

Another option, Habyarimana cited, consumers should monitor the market and know when the price of a certain commodity has lowered, so they can buy in large quantities for future consumption when prices might increase again.

Public experience

Schelley Agasaro, a resident in Kacyiru sector, said the issue of rising in commodity prices is a concern that is leaving many stranded.

“On top of the rising prices, there is a shortage of products. This affects people in many ways especially if you have an irregular source of income and can’t keep up with the continued rise in prices,” she said.

She added: “If you ask around, some people are now stealing not because it is a habit but out of hunger.”

Marie Nyiransabimana, a vendor in Kimironko Sector, said that she has been incurring losses by making little or no profit from her sales and the reduction in the number of her clientele.

“Sometimes you are forced to sell perishable products at the same price you bought them because even customers themselves can’t afford the price, for instance potatoes and plantains will become stale in few days unless someone buys them” she said.

Nyiransabimana said that some people have reduced the quantity of things they used to buy, some from three to two meals a day, and the government needs to intervene in this issue.

What the government can do

Habyarimana said the government should consider financial intervention for people who are in category D and E and those who have fallen back under poverty line because they are the most affected.

“If someone worked in VUP (Vision Umurenge Program) programmes to earn Rwf2000 per day for the whole household, as inflation continues to rise, that amount will no longer be able to feed them,” he said.

The government also needs to continue monitoring the trend and take actionable measures with proper timing, he added.

Governor John Rwangombwa of the Central Bank noted that things would have been worse for commodity prices had the government not intervened in terms of subsidizing public transport and fuel prices.

“What the government does can only reduce the impact but not fully address it because this is beyond our control as it derives from global pressures. But we are sure that prices will come back down by next year.”

The Central Bank predicts 2022 average inflation to be up to 9.2 per cent before coming down to 7.5 per cent next year.

By press time, efforts to secure a comment from the Ministry of Trade and Commerce were futile.

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