July 27, 2009 / 3:47 PM / 9 years ago

Ethiopia's inflation rate tumbles to 2.7 pct in June

ADDIS ABABA (Reuters) - Ethiopia’s annual inflation rate fell more than 10 percentage points to 2.7 percent in June from 14.2 pct in May, as food prices fell, the government said on Monday.

Inflation in the Horn of Africa nation had hit a high of 64.2 percent in July 2008, driven by high food and fuel prices.

“The main reason for the fall in general inflation was ... the decrease in the price of food components, mainly cereals, as compared to .... June in the previous year,” the country’s Central Statistical Agency said in a statement.

Ethiopian Prime Minister Meles Zenawi has said a halt on government borrowing and a rise in bank reserves is underpinning the steadily declining rate in sub-Saharan Africa’s second most populous nation.

Ethiopia’s central bank had also instructed private banks to restrict borrowing in a bid to cut back inflation.

The global recession has slashed demand for Ethiopia’s agricultural exports and power cuts have ravaged business, fuelling a foreign currency shortage.

Ethiopia says it expects growth of about 10 percent in 2009 but the International Monetary Fund predicts 6.5 percent.

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