June 14, 2011 / 11:06 AM / 7 years ago

UPDATE 1-Food prices drive Ethiopia May inflation to 35 pct

* Food prices rise 41 pct yr/yr in May

* IMF says inflation Ethiopia’s main economic challenge

(Adds details, background)

ADDIS ABABA, June 14 (Reuters) - Inflation in Ethiopia jumped to almost 35 percent in annual terms in May, driven by surging costs of food and imports that have led the government to impose a price cap on some goods.

Official data showed prices overall grew 34.7 percent on the year, with food costs up 41 percent compared with a 32 percent rise a month earlier. The cost of tobacco increased 39.7 percent while clothing and footwear prices were up 34 percent.

Ethiopia has imposed price ceilings on more than a dozen commodities including some essential foodstuffs. Food accounts for just over 57 percent of the basket used to measure the inflation rate.

The International Monetary Fund said earlier this month that the surging rate of inflation was the main macro-economic challenge facing the Horn of Africa nation. [ID:nLDE750025]

The Washington-based body projected the country’s economy would expand by 7.5 percent this year, below official estimates of 11.4 percent. (Reporting by Aaron Maasho; Editing by Richard Lough)

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