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Working Paper 151 - The Dynamics of Inflation in Ethiopia and Kenya

08-Sep-2012

Ethiopia and Kenya have experienced strong economic growth for over nearly a decade. However, inflation, which was thought to be under control, has become a major challenge. High, and volatile, inflation is a threat to good economic performance and has negative effects on many of the poor. Table 1summarizes the recent performance. Economic growth took off in 2004 in both Ethiopia and Kenya, but alongside higher growth there has been rapid inflation and large inflation volatility. For example, during 2011 inflation peaked at over 40 per cent in Ethiopia and 20 per cent in Kenya.

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