Trade Policies and Measures to Curb Inflationary Pressures in Rwanda

Slide Note

The presentation highlights the inflationary pressures faced in Rwanda, particularly in the food sector due to various factors such as the impact of the Ukraine-Russia war, fuel price increases, and supply chain disruptions. It discusses the causes of food inflation, price variations of basic commodities like maize, and trade policies implemented to address these challenges.

jan_gue Follow

Uploaded on Sep 10, 2024 | 0 Views

Download Presentation

Please find below an Image/Link to download the presentation.

The content on the website is provided AS IS for your information and personal use only. It may not be sold, licensed, or shared on other websites without obtaining consent from the author. Download presentation by click this link. If you encounter any issues during the download, it is possible that the publisher has removed the file from their server.

E N D

Presentation Transcript

Trade policies and measures taken to curb inflationary pressures Presented during the Policy dialogue on inflation organised by EPRN (www.eprnrwanda.org ) UGUSHYINGO 2022 FEBRUARY 2023 MINISTRY OF TRADE AND INDUSTRY 1

Outline of the Presentation Inflationary pressures Causes of Food price inflation in Rwanda Comparison of prices of basic commodities Trade Policies and Measures to curb food prices MINISTRY OF TRADE AND INDUSTRY FEBRUARY 2023 2

INFLATIONARY PRESSURE Inflationary pressure occurs when the demand is very high than the supply. Due to these pressures, either more items are needed to be produced to keep up with or surpass customer demand, or prices will rise as a result of a shortage of supplies. Due to supply and demand, inflationary forces lead the economy to change. MINISTRY OF TRADE AND INDUSTRY FEBRUARY 2023 entire food system by increasing costs along the value chain from farm to table. On-farm 3

Causes of food Inflation in Rwanda Causes of food Inflation in Rwanda Food prices have been fluctuating overtime since the outbreak of the Covid19 pandemic in 2020; Ukraine Russia war affected price of essential commodities like bread (wheat grain), cooking oils, fuel, soap etc. Increases in fuel prices resulted into high transportation costs, which in turn affect negatively consumers in terms of food availability and affordability. Prices of other strategic commodities have increased due to a number of factors: supply chain disruptions, export bans, rebounding demand trends among others; Low production at national level due to prolonged dry season, high prices of fertilizers and pesticides entire food system was affected along the value chain from farm to table. On-farm production costs, commodity transport costs, milling, processing and value addition activities have been all affected.

Price variation of basic commodities in Rwanda Average %age change Commodity: MAIZE Year/ Month Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2019 285 315 338 347 372 444 473 480 500 395 100% 2020 475 352 299 351 297 260 - 252 303 345 352 383 334 -16% 2021 390 294 253 248 248 249 250 250 270 328 354 400 295 -25% 2022 354 383 399 400 408 419 480 479 502 608 667 687 482 22% 2023 Prices of maize keeps increasing due to high demand arising from human consumption and animal feed production 624 600 612 55% MINISTRY OF TRADE AND INDUSTRY FEBRUARY 2023 5

Price variation of food commodities in Rwanda Average % Commodity: UMUCERI-KIGORI change Year/ Month Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 686 2021 740 751 749 727 727 730 706 696 695 682 683 714 100% 2022 772 758 758 800 983 993 1006 1042 1100 1158 1188 1200 980 37% 2023 1239 1300 1270 78% The average price of short grain rice increased from 37% in 2022 to 78% in January and Feb 2023. The country always import rice from Tanzania, Pakistan and India to complement with local production. MINISTRY OF TRADE AND INDUSTRY FEBRUARY 2023 6

Price variation of food commodities in Rwanda Beans Year/ Month Annual Average %age change Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2021 702 677 677 683 653 620 629 604 587 582 570 548 627.6 100% 2022 561 569 590 597 655 663 799 860 938 1126 1306 1130 816.1 30% Beans price increased by 30% throughout the year 2022. The main causes included low production and high demand from schools. Low agricultural production resulted from the prolonged dry season. MINISTRY OF TRADE AND INDUSTRY FEBRUARY 2023 7

Price variation of food commodities in Rwanda Average % change Commodity: Irish potatoes Year/ Month Jan Feb Mar Apr may Jun Jul Aug Sep Oct Nov Dec 2020 333 346 368 348 350 362 - 408 476 472 319 279 369 100% 2021 284 288 301 310 330 313 286 288 336 327 274 233 298 -19% 2022 302 323 350 350 407 396 439 465 490 508 481 464 415 12% 2023 521 625 573 55% The price of irish potatoes increased throughout the year 2022. Reasons: shortages in supply which resulted from famers inability to access to fertilizers and potato seeds. MINISTRY OF TRADE AND INDUSTRY FEBRUARY 2023 8

Price variation of food commodities in Rwanda Cooking Banana Year/ Month Annual Average %age change Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2021 248 238 236 242 232 188 153 124 156 188 214 236 204.58 100% 2022 249 259 269 304 300 272 270 239 251 311 341 388 287.75 41% Price of banana increased by 41% in 2022. This was mainly due to higher transportation costs and low production. Also increases in prices of substitutes like irish potatoes and sweet potatoes has led to increases in demand for cooking banana. MINISTRY OF TRADE AND INDUSTRY FEBRUARY 2023 9

Trade Policies and Measures taken to curb inflation In collaboration with MINECOFIN and RRA, Stay of applications on sugar, wheat, Rice, cooking oils to reduce the price of these commodities; Duty remission on packaging materials; Inspection to avoid speculation and stock hoarding; Awareness through Issuance of Public Notice on Price Display and invoicing; MINISTRY OF TRADE AND INDUSTRY FEBRUARY 2023 10

Trade Policies and Measures taken to curb inflation Looking for alternative markets to source basic commodities (Maize, sugar and wheat) in Zimbabwe and Mozambique. MINICOM is conducting an assessment of transport costs of basic commodities countrywide to check if there is no speculation in transport prices of basic commodities. Linking farmers to processors (signing contracts) MINISTRY OF TRADE AND INDUSTRY FEBRUARY 2023 11