October 20, 2009 / 1:53 PM / 10 years ago

Ethiopia records deflation for third month running

A motorist fills up at a petrol station in Coalville, central England, October 15, 2008. REUTERS/Darren Staples

ADDIS ABABA (Reuters) - Ethiopia has recorded a third straight month of deflation with an annual negative inflation rate of 4.1 percent in September on falling food prices, the government said on Tuesday.

Inflation in the giant Horn of Africa nation hit a high of 64.2 percent in July 2008 driven by record high food and fuel prices, but has fallen every month since.

“The main reason for the decline is the fall in the prices of food components, especially cereals,” the country’s Central Statistical Agency said in a statement.

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

Ethiopia’s central bank instructed private banks to restrict borrowing as part of the bid to curb inflation.

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

The government says it expects growth of about 10 percent in 2010. Opposition parties contest the government’s statistics.

Ethiopia, one of Africa’s biggest potential markets with some 80 million people, is drawing growing foreign investor interest in agriculture, hydropower and oil and gas exploration.

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