Rwandan food prices key to low, stable prices – central banker

Rwanda was the only country in east Africa that did not suffer sharp swings in inflation in 2011 and 2012, which Governor John Rwangombwa put down to prudent monetary policy and coordination between the bank and Treasury.

“However, the sustainability of low and stable inflation over the medium term will depend on different government measures to complement National Bank of Rwanda policy actions,” Rwangombwa, a former finance minister, said in a statement.

“These measures include enhancing capacity for food production and distribution, management of strategic reserves and management of (the) seeds programme,” he said, suggesting there were upside risks to food prices.

For its part, the central bank would maintain appropriate measures to contain inflationary pressures, he said.

Rwanda’s urban inflation rate, used to determine policy, rose to 3.68 percent in June, pushed higher by a more than 4 percent rise in food prices year-on-year compared with a 2.6 percent increase in food costs in May.

Even so, Rwangombwa said in June that inflation appeared to be under control as he cut the key report  rate by 50 basis points to 7 percent. The IMF has projected Rwandan inflation will average 5.6 percent in 2013.

The Reuters