Economy

Policy and Data Credibility Deficit Threatens Inflation Fight: EEA

The Reporter · 4 hours ago · Read the Full Story on The Reporter

AI SUMMARY

A survey by the Ethiopian Economics Association reveals deep skepticism among economic experts regarding the credibility of macroeconomic policies, official inflation data, and central bank independence.

A survey by the Ethiopian Economics Association (EEA) of 266 economic professionals reveals widespread skepticism regarding Ethiopia's macroeconomic policy framework, official inflation data, and central bank independence.
52.3 percent of surveyed experts believe the National Bank of Ethiopia (NBE) lacks operational independence.
60.9 percent rate the central bank's commitment to achieving single-digit inflation as having low or very low credibility.
57.2 percent view official Consumer Price Index (CPI) numbers from the Ethiopian Statistical Service as unreliable, with 35 percent suspecting a systematic downward bias.
71.4 percent of respondents attributed data discrepancies to political or institutional pressure.
Only 14.3 percent of scholars rely on official ESS CPI reports as their primary source for inflation analysis.
85.9 percent warned that the data credibility gap undermines the NBE's ability to anchor public inflation expectations.
70.7 percent reported that public and institutional confidence in the Birr as a store of value has deteriorated since July 2024 exchange rate reforms.
55.6 percent anticipate further increases in headline inflation over the coming 12 months, and 72.1 percent reported a more pessimistic economic outlook compared to six months prior.
35.1 percent of academic researchers and 60 percent of private sector representatives estimated actual inflation at 35 percent or higher, compared to 75 percent of Ministry of Planning and Development respondents estimating it below 20 percent.
The study concludes that inflation is primarily structural and supply-driven, with 83.5 percent citing exchange rate reform and Birr depreciation as leading drivers, followed by domestic supply shocks at 73.1 percent and global commodity price volatility at 68.8 percent.
National headline inflation moderated from a peak of 34.04 percent in 2022 to 13.21 percent in 2025, but regional disparities persist with Benishangul-Gumuz at 25.57 percent and Addis Ababa at 24.25 percent.
The report recommends strengthening statistical independence, enhancing NBE operational autonomy, improving fiscal-monetary coordination, and targeting structural bottlenecks to boost agricultural productivity and logistics.

Read the Full Story on The Reporter

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