East African Business Week

KIGALI, RWANDA -  Rwanda saw a drop of 0.44 points in annualised inflation rate in May due to reduced price indices of food and non-alcoholic beverages, vegetables, meat and health beating earlier projections that inflation rate could continue to rise and reach 6% by end of June.
Annual inflation rate, which is a measure of consumer prices throughout 12 months, fell to 4.54% in May against 4.98% a month before, according to government's latest Consumer Price Index (CPI) release.
The fall of annual inflation rate comes at a time when the government announced it would reduce fuel taxes effective July 1 this year and January 1, 2012 to tame the rising cost of living in the country with more than 50% citizens poor.
It is believed that the cost of fuel is passed on to other activities mainly industrial production and transport of goods, people and services, which require fuel to operate efficiently.
Meanwhile, the Minister of Finance and Economic Planning, Mr  John Rwangombwa said while reading the budget for 2011/2012 financial year that the cause of high cost of food on the local market was partly arising from faulty supply chain which needs to be worked on rather than fuel prices that have gone up on local and international markets due to unrest in oil producing countries including Africa's Libya.
The National Institute of Statistics of Rwanda (NISR), which released the CPI stats, stated that monthly inflation rate was 2.4% in May.
NISR indicates that price index for meat fell by 0.78%, food and non-alcoholic beverages index fell by 0.92%, while vegetables and health indices contracted by 5.64% and 0.04% respectively.
Meanwhile, the underlying inflation rate, which excludes fresh food and energy, rose by 0.73% if compared to the previous month and increased by 4.32% on annual change.
The annual average underlying inflation rate stood at 1.7 % in May up from the previous month 1.5 %.