PSI calls for immediate action to curb inflation

Addis Ababa, January 25, 2022 (FBC) – Inflation will remain to be a national threat for Ethiopia unless immediate action is taken, the Ethiopian Policy Study Institute (PSI) said.

The Policy Study Institute held a workshop which is aimed at identifying causes of the increase in food prices and possible solutions to be taken in the future to fix the problem.

The Agricultural Mechanization and Rural Development Center at PSI presented research papers on the workshop.

The Director General of PSI, Professor Yene Petros, mentioned that the institute has been conducting 50 studies that will be a policy option for the government this fiscal year.

A survey has been conducted in more than 50 sample areas with surplus producing and those which are experiencing food shortage.

Prof. Beyene pointed out that the last 10 years’ price situation in the country was taken from the Statistics Agency as input for the study.

He pointed out that the current inflation in Ethiopia will continue to be a national threat unless due attention is given to the problem and quick action is taken accordingly.

The study identified four major factors for the inflation; a mismatch between supply and demand, rising production costs, imbalance between real economic growth and government spending, and lack of modern market system.

Taking these problems into consideration, the study suggested the solutions that should be taken by the government in the future.

Government should continue importing basic food items from foreign markets to improving supply of basic food items to low-income citizens who are the most affected by the inflation; it is recommended as one of the short-term solutions by the research findings.

Findings also showed that proper financial management should be put in place to ensure that the flow of money in the economy is consistent with the actual growth rate of the economy.

It has been pointed out as a long term policy action that productivity of small holder farmers should be increased and medium and high level agricultural investments are promoted in advance.