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Rwanda in record inflation

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KIGALI, RWANDA — Rwanda's inflation could surpass the initial projection of 6% at the end of 2011 on the back of high oil prices raising concerns that the cost of living could rise sharply in the East African country.
The March inflation is expected to hit 3% from 2.6% in February because of high oil prices.
Since last week, petrol and diesel pump prices jumped up 5.2% and 6% respectively, becoming the highest oil prices the country has ever had.
A litre of petrol as well as diesel is costing Rwf1, 015(US$1.7) because of unrest in the oil rich Libya and Middle East.
Transport and education costs have gone up 4% and 18.17% respectively.
Food prices jumped 1% as farmers enter a new season. Rwanda suffers similar problem as her neighbours in the region.
“There are certainly worries of general inflationary pressures higher than initially projected, if international oil prices continue to shoot up,” the National Bank of Rwanda (NBR) Deputy Governor Mr. Claver Gatete said.
He said imports' prices pass-through in domestic prices is high in Rwanda since imported consumer goods weight 20.5% in the Consumer Price Index (CPI) basket.
Last month, inflation or the measure of the change in prices of goods and services more than doubled.
 Inflation rose to 2.6% from 1.1% in January while it stood at 0.2% in December last year.
 Energy and education were the first driving factors of inflation accounting for 25% each, against 20.0% for food.
 Gatete said during the past two months, significant increases in school fees, transport cost and clothes' prices had been recorded.
 High oil prices are a threat to local producers. Since this year, prices of locally made goods have gone by at 2.5%.
 Inyange Industries, the leading food processor in Rwanda has raised prices twice citing at costly raw materials.   
The company has cut off its distributors and is replacing them with its direct sales depots.
 Gatate said that the current inflation rate is far below the Central bank's policy rate, which stands at 6%.
 He said the Bank's monetary policy committee expected to meet end of March or early April will have to undertake an assessment of short-term effect of current exogenous shocks and will review accordingly the monetary policy orientation for the second quarter 2011.
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