he family of Abebu Tadele is one of those that belong to the middle-class households in the perspective of the Ethiopian economy. They own a small restaurant, and she also makes 14,000 ETB a month working as a cashier at Bole Medhanialem Church. Despite having such a variety of income-generating options available, Abebu is suffering greatly from the nation’s current, skyrocketing inflation.
“A year ago, we used to buy a killo of Teff 52– 53 ETB. Now we pay up to 135 ETB. The average price of A Killo of red onion ranged from 20-25 ETB and now has reached up to 120-130 ETB. Simply put, groceries have doubled and tripled, the school fee for the children has been increasing at an alarming rate, and we pay 30,000ETB monthly for house rent. Prices do simply skyrocket,” Abebu underscored.
“The cost of living is getting difficult from time to time. Adding insult to injury, my husband has not been actively working since the war in the north broke out,” she said.
Legesse Tadesse, a father of three and breadwinner of a family of six, is a civil servant earning a monthly salary of 9,570 ETB. He works at Oromia Land Administration Bureau. Given that the office is based in Addis Abeba, he resides here. He is grateful that he had the good fortune to own a few hectares of fertile land in rural Oromia since the harvest made it possible for him to handle the escalating inflation.
“Two years ago, we used to purchase a quintal of Teff for 6,000 ETB. For that same quintal of Teff now, I must spend more than 11,000ETB. What would I have done if I hadn’t had the good fortune to ensure the harvest of the crops on my farm in my hometown? I’m terribly sorry for my neighbors who, in contrast to me, lack these advantages but make similarly modest wages.
There are undoubtedly millions of civil servants who lack the additional means of earning that Abebu has or the benefit of having something supporting their income like Legessee.
A typical example is Sewnet Gebrenigues, a senior specialist in the civil service who works for the Ministry of Agriculture. The mother of two has worked at the ministry for more than ten years as an animal laboratory technician. She struggles to pay the family’s very basic bills with her salary of 6,000 ETB.
Her expenses are 11,000ETB, about twice the amount of her wage, due to the housing rent and the kids’ school costs. Sewnet said, “I have no option but to take on additional work nights and weekends on top of my civil service duties.
The price hikes of different commodities especially that of food items have continued despite the stagnation of incomes of millions of citizens be it civil servants like Sewnet or other self employed individuals.
The majority of the contributing elements to the current, raging inflation, according to economists, are the serious peace and stability issues in various parts of the country. According to these economists, the issues that come next are market obstacles, particularly the existence of too many intermediaries combined with deficiencies on the production side.
Despite official statistics indicating a somewhat better inflation rate over the past several months, it does not seem to be beneficial to people like Legesse in their everyday lives. According to the most current data, the inflation rate has decreased from its peak of up to 35 percent in December and March of 2022 and 2023, respectively, to 28 percent.
Looking at the cost of living, Legesse questions the accuracy of the official figures reported regarding the inflation rate.
“What we experience on the daily basis is much more frustrating. Officials attribute the inflations to certain commodities. They tell us certain numbers. I suspect the real numbers are even higher,” he contends.
The tricky part is that if an individual’s income stays the same as it was two years ago, their purchasing power decreases by more than half when the inflation rate is stated to be 28 percent this month and 33 percent during this identical month last year.
Apart from that, there are economists who do their own computations and offer different results.
Steve Hanke, a professor of applied economics at John Hopkins University who frequently tweets on political and economic difficulties in Ethiopia, stated in one of his remarks that he had assessed current inflation in Ethiopia to be 48%. According to economists like Arega (PhD), that doesn’t seem as strange as it looks.
“I’d prefer not to refer to it as ‘contentious’. It would have been “controversial” if he had stated that he had learned that inflation had decreased from its previously escalating pace. It’s important how he calculated. The outcome would depend on the items he assigned more weight to, Arega stated.
Political economist Shewaferahu Shitaye seems to concur wholeheartedly with Steve’s conclusion. “I can’t agree enough,” He asserted.
Shewaferahu remarked that “the inflation has in fact continued to increase at an increasing rate.” He continues to be cautious when gathering the data, paying close attention to the sampling size in particular. He questions the sampling’s “fair representation.” He contends that a larger sample size must be conducted.
Currently, Ethiopia appears to be one of the top three inflationary economies in Africa and one of the top ten worldwide.
Arega says the supply chain is still quite troublesome. Arega added, “We discovered there are more brokers than one might think in the network. According to a research conducted by the Ethiopian Economists Association, the fruit and vegetable market in particular in Oromia Regional State continues to be extremely susceptible in this respect.
“We have seen wheat on the black market this year. Such occurrences have not been typical. In the past, hoarding was’reserved’ for businesspeople. These days, farmers also hoard. Because they do not want to supply you at the cost that your government sets, said Arega, who took part in the association’s assessment of the Oromia Regional State.
The three regional states of Oromia, Amhara, and Southern Part account for up to 83 percent of the production and supply. Arega claimed that any issues affecting these regional states would be dangerous for the entire nation.
For Sewnet, the ongoing inflation and the cost of living is all maddening “The only reason we are not mentally broken is our preoccupation with other more sensitive national issues,” she said.
In the current situation, Amhara Regional State, which contributes 35 percent of the crop production, is highly affected by the conflict. Even Oromia though relatively better is affected by the conflict. The Wolega and Wolenchiti areas are worth-mentioning in this regard.
“The cost of compromising peace and security has proved to be huge and we will continue paying the price,” Shewaferahu noted.
In addition to the ongoing conflict in different parts of the country, the current harvest season is plagued by significant problems with fertilizer distribution, among other things. The country has continued to experience severe drought in several regions. With the exception of Tigray, the country’s position regarding peace and stability has not improved. Tomorrow seems bleak for all of these and other reasons.
“The worst is yet to come,” Arega predicts.