Rwanda Achieves Significant Drop in Inflation Rate in 2024
Rwanda’s inflation dropped to 4.8% in 2024, down from 14.0% in 2023, due to strong agriculture, easing commodity prices, and monetary policies. A temporary rise occurred in January 2025, attributed to previous harvests, but is projected to stabilize at 6.5% in 2025. The economy shows signs of strong growth, bolstered by export demands and stable financial conditions.
In 2024, Rwanda’s inflation rate plummeted significantly to 4.8 percent, a dramatic reduction from 14.0 percent in 2023, according to Central Bank Governor Soraya Hakuziyaremye. This decline is attributed to robust agricultural performance, a decrease in international commodity prices, and stringent monetary policies enacted by the central bank. Hakuziyaremye noted the government’s efforts to lower essential goods prices as pivotal in this achievement.
The drop in inflation signals enhanced economic stability and increased consumer purchasing power. Experts indicate that lower inflation typically benefits businesses by reducing operational costs, thereby fostering investment and promoting economic growth. Stabilized prices enhance disposable income for households, subsequently boosting economic confidence.
Governor Hakuziyaremye mentioned a temporary spike in inflation at the start of 2025, with rates reaching 7.4 percent in January, mainly due to effects from a strong agricultural harvest in late 2024. Nevertheless, inflation moderated to 6.3 percent by February 2025. Projections suggest inflation may stabilize at about 6.5 percent in 2025 and further decline to around 4.1 percent by 2026.
Potential risks such as regional and global tensions and adverse weather conditions could threaten economic stability. Currently, inflation in Sub-Saharan Africa remains high, projected at 12.3 percent for 2025. The bi-annual meeting of the central bank serves to communicate its monetary policy aimed at sustaining financial stability, with Hakuziyaremye expressing confidence in the financial sector’s stability despite emerging credit risks.
In 2024, the global energy index saw a 2.7 percent decrease, anticipated to decline further by approximately 6.3 percent, primarily due to falling crude oil prices and reduced global demand. The outlook for Rwanda’s economy remains promising, with growth predicted to surpass the earlier estimate of 8.3 percent, driven by notable advances in industrial, mining, construction, and services sectors.
Moreover, export growth reached 6.9 percent, fueled by rising prices for traditional export items such as minerals and coffee, alongside sustained regional demand. Imports also increased, albeit at a slower rate than in 2023, with a 5.8 percent rise largely due to demand for capital goods and raw materials. The Central Bank has reduced its lending rates to 6.5 percent, contributing to a modest decrease in interbank rates.
In summary, Rwanda’s significant reduction in inflation to 4.8 percent in 2024, stemming from agricultural success, improved commodity prices, and stringent monetary policies, reflects increased economic stability. While short-term risks persist, the financial sector remains resilient. Projections indicate a positive economic trajectory for 2025 and 2026, reinforced by substantial growth across various sectors and favorable export dynamics.
Original Source: www.newtimes.co.rw
