Policy, Data Credibility Deficit Threatens Ethiopia’s Inflation Fight: EEA Survey

A sweeping expert elicitation survey conducted by the Ethiopian Economics Association (EEA) reveals deep-seated skepticism among economic scholars regarding the credibility of Ethiopia’s macroeconomic policy framework, official inflation data, and the operational independence of the central bank. The findings—detailed in a research report titled “The Anatomy of Inflation in Ethiopia: Structural Shocks, Policy Credibility, and the Path to Price Stability”, authored by Naser Yenus—underscore a growing confidence deficit that threatens government efforts to curb inflation and restore macroeconomic stability. According to the report, 52.3 percent of surveyed experts believe the National Bank of Ethiopia (NBE) lacks operational independence, while 60.9 percent rate the central bank’s commitment to achieving single-digit inflation as having low or very low credibility.

Trust in official statistics has eroded similarly, as 57.2 percent of respondents view official Consumer Price Index (CPI) numbers compiled by the Ethiopian Statistical Service (ESS) as unreliable, with 35 percent suspecting a systematic downward bias. When asked about the root causes of these discrepancies, 71.4 percent of respondents pointed to political or institutional pressure. Reflecting this trust deficit, only 14.3 percent of surveyed scholars rely on official ESS CPI reports as their primary source for inflation analysis, with many turning instead to reports from international financial institutions, informal market observations, and peer networks.

Furthermore, 85.9 percent warned that this data credibility gap directly undermines the central bank’s ability to communicate monetary policy effectively and anchor public inflation expectations. Confidence in the local currency has also suffered following recent macroeconomic adjustments. The report notes that 70.7 percent of respondents feel public and institutional confidence in the Birr as a store of value has deteriorated since the implementation of major foreign exchange rate reforms in July 2024.

Looking ahead, experts remain overwhelmingly pessimistic about near-term price stabilization, with 55.6 percent anticipating further increases in headline inflation over the coming 12 months, 72.1 percent reporting a more pessimistic economic outlook compared to six months prior, and 47.3 percent rating the government’s commitment to fiscal disci…