September 28, 2010 / 12:25 PM / 10 years ago

Ethiopia inflation rate slows to 5.3 pct in August

Three original Starbucks Coffee cups are seen on a display in a coffee shop in Ethiopia, March 13, 2007. REUTERS/Radu Sigheti

ADDIS ABABA (Reuters) - Ethiopia’s inflation rate slowed to 5.3 percent in August from 5.7 percent in July, helped by a 22.3 percent year-on-year decline in the cost of cereals, the statistics office said in a statement.

The Central Statistical Agency said the overall food price index fell 1.0 percent in August from a year earlier, although, with the exception of cereals, most other food components rose.

The agency said non-food inflation was running at 15.6 percent in August, down from 17.7 percent in July and the lowest rate since October 2009 when it was 14.8 percent.

Ethiopia was hit by soaring inflation in 2008 and much of 2009, driven by record global food and fuel prices. The rate plummeted from July 2009 to October 2009 after the government stopped state borrowing and increased bank reserves.

Prime Minister Meles Zenawi says his government will target annual inflation of 6 percent over the next five years.

Analysts say, however, that there is a risk inflation rates will creep higher after the central bank devalued the birr by 16.7 percent at the start of September.

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