January 7, 2011 / 7:04 AM / in 7 years

Ethiopia imposes price caps to fight inflation

ADDIS ABABA (Reuters) - Ethiopia has moved to cap prices on several imported and domestic commodities in an effort to ease inflationary pressures, Prime Minister Meles Zenawi announced late on Thursday.

<p>Women sell vegetables and fruits on the roadside in Nairobi, Kenya, June 19, 2008. REUTERS/Antony Njuguna</p>

The Horn of Africa nation’s annual inflation rate slowed to 10.2 percent in November from 10.6 percent the previous month, but retail prices of some food items such as bread have doubled during the past year.

Speaking at a meeting with members of Ethiopia’s business community late on Thursday, government officials said the cap would affect the prices of 17 items including rice, bread and sugar.

“The measure is meant to stabilise the market by regulating price gouging and hoarding,” Meles said at the event.

Officials accused traders of inflating prices off the back of global price hikes and Ethiopia’s recent currency devaluation.

Addis Ababa devalued the birr currency by 16.7 percent in September, a move that was welcomed by the International Monetary Fund , and targets an annual inflation rate of 6 percent over the next five years.

Analysts though say there is a risk inflation will rise again following the devaluation.

After soaring in 2008 and the first half of 2009, the rate of inflation plummeted from July 2009 to October 2009 after the government stopped state borrowing and increased bank reserves.

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