War and missteps of the authorities: what led to hyperinflation in Ethiopia

In May, inflation in Ethiopia reached 37.2%.Quartz breaks down the causes of this economic problem and assesses the country's future prospects

Fighting inflation in Ethiopia is not the first time. While world markets have remained stable, the prices of consumer goods in the country have often been subject to strong fluctuations: in only five of the last 20 years, the inflation rate in the country has been below 10%. Now, for the first time in ten years, Ethiopia's inflation has exceeded 25% for the past year.

This time, however, life became almost unbearable for the working class. Blue-collar wages have stagnated for years, leaving Ethiopian workers among the lowest paid in the world. At the same time, the prices of food, housing, fuel, industrial inputs, rent, and virtually every other commodity have skyrocketed. Essential foodstuffs such as butter, bread, bottled water and MILK are about to become unaffordable for the mainstream Ethiopian population.

The Ethiopian government itself seems to be admitting defeat in the fight against double-digit inflation, albeit reluctantly. In June, Ethiopian Finance Minister Ahmed Shide said that the authorities were going to bring inflation down to 11.9% in the coming fiscal year. However, such plans can hardly be called feasible, given that inflation was 37.2% in May 2022.