Highlights:

Part II focuses more specifically on the social and economic impact of high inflation in the country. It also gives an overview of the measures the Government put in place to mitigate the impact of inflation in 2022.

Social and economic impact of high inflation in Rwanda and rising food prices have affected lower income households in particular (cf. figures 2.1 & 2.2), who devote a larger share of their expenditures to food and appear to face higher rates of food price increases, compared to higher-income households.

High and increasing food prices can generate an immediate threat to the security of a household’s food supply, thereby undermining population health and impairing child nutrition, particularly among the poor. Using data from the rural markets prices, the report documents that districts with highest prevalence of stunting are also the one with highest food price increase (Figure 2.4). Therefore, it is stressed that, if not addressed properly, high food prices could undermine the hard-fought gains in recent years that saw a reduction in stunting from 38 percent in 2014/15 to 33 in 2019/20.

The report then presents the different measures adopted by the Government to mitigate the impact of inflation during 2022, in particular increased fuel subsidies, increased spending on social protection programs, and increased subsidies for fertilizers and seeds.

According to the report, further measures to protect the poor and most vulnerable over the short term could include reinforcing social protection policies that were introduced in response to the COVID-19 pandemic, particularly increasing the coverage of the Nutrition Sensitive Direct Support and Public Works programs, as well as securing financing for the emergency cash transfers; providing emergency support to agricultural production; scaling up and improving targeting of school feeding; and strengthening policies to address food insecurity and prevent child stunting, particularly expanding the role of early childhood development centers.