Rwanda’s inflation projected to decelerate due to Covid-19

Rwanda’s headline inflation is projected to decelerate due to significant drop in aggregate demand resulting from Covid-19 pandemic, the National Bank of Rwanda said Thursday.

“Headline inflation is projected to decelerate leading to an average of 6.0 percent and 1.0 percent for 2020 and 2021 respectively, pointing out the need for policy measures to support aggregate demand in the economy,” the central bank said in a statement, following a monetary policy committee meeting held on Wednesday.

The average quarterly headline inflation for first quarter 2020 stood at 8 percent mainly attributed to increased food and energy inflation, it said.

Leading indicators suggest that the performance of domestic economy was strong in the first two months of 2020 with the composite index of economic activities growing by 5.1 percent in the first quarter of 2020, while the outbreak of Covid-19 in mid-March 2020 led to significant slowdown mainly in the services and industrial sectors, according to the bank.

On the external sector the trade deficit deteriorated by 18.8 percent in the first quarter of 2020 due to higher imports compared to exports, it said.