…headline rate falls to 9.7% in December as price pressures ease
Ethiopia closed 2025 with a single-digit inflation rate for the first time in seven years, as headline inflation fell to 9.7 percent in December 2025, marking a significant easing of price pressures in Africa’s second-most populous nation.
The country also joins Ghana, Africa’s largest gold producer, which saw inflation fall to a single-digit rate of 9.4 percent last September and has since remained in single-digit territory.
Data from the Ethiopian Statistical Service (ESS) on Friday show that inflation declined for the seventh consecutive month to 9.7 percent, the lowest level since November 2018, compared with 17.0 percent a year earlier.
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Inflation has steadily moderated through the year, easing from 15.5 percent in January. On average, Ethiopia’s inflation rate fell to 13.3 percent in 2025, down from 21.0 percent in 2024 and 30.2 percent in 2023.
The slowdown places Ethiopia among a growing list of African economies with single-digit inflation, including South Africa, Tanzania, and Kenya. South Africa recorded inflation of 3.5 percent in November, while Tanzania recorded 3.4 percent, and Kenya’s rate stood at 4.5 percent in December.
Food inflation remains the primary driver of price movements, reflecting fluctuations in agricultural output, climate shocks, logistical bottlenecks, and security challenges. According to the ESS, food and non-alcoholic beverages—which account for 53.5 percent of Ethiopia’s consumer basket—recorded year-on-year inflation of 9.8 percent.
Prices of bread and cereals were unchanged, while coffee and non-alcoholic beverages rose by 48.9 percent, sugar and related products by 16.1 percent, meat by 13.7 percent, and vegetables by 8.3 percent.
Non-food inflation stood at 9.6 percent, driven by increases in miscellaneous goods and services (21.5 percent), transport (17.6 percent), and communication (13.9 percent). Housing, water, electricity, and fuel prices rose modestly by 1.9 percent.
On a month-on-month basis, headline inflation declined by 0.3 percent between November and December, led by a 0.6 percent drop in food and beverage prices, particularly fish and seafood, oils and fats, and dairy products.
The country’s inflation has moderated sharply from the elevated levels recorded in 2023 and early 2024, when annual inflation exceeded 30 percent amid supply constraints, currency pressures, and higher global commodity prices.
As part of a four-year economic reform programme supported by the International Monetary Fund, the government adopted a market-based foreign exchange regime and tighter monetary policies, helping to curb inflationary pressures.
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However, exchange rate volatility, foreign exchange shortages, and past monetary expansion have continued to fuel imported inflation. A recent World Bank report ranked Ethiopia, alongside South Sudan, among Africa’s weakest-performing currencies in the first eight months of last year, citing declining export revenues, limited foreign exchange inflows, and persistent macroeconomic pressures.
While ongoing reforms and improved harvest conditions have helped slow inflation, structural constraints are expected to continue limiting the pace of disinflation in the near term.