Ethiopia cracks down on price-cap violators

Ethiopia has penalised retailers and suppliers in the capital who raised the prices of consumer goods such as bread by amounts higher than caps set in January, authorities said on Thursday.

The Horn of Africa nation imposed price ceilings earlier this month on 17 imported and domestic commodities including rice and sugar in an attempt to ease inflationary pressures.

Policymakers around the world are battling a surge in prices of food and other commodities.

Government officials say traders have artificially inflated prices on the back of global price hikes and Ethiopia's recent currency devaluation.

We are at an early stage right now and this is just the preliminary warning, Shisema Gebreselassie, director of the Addis Ababa Trade and Industry Bureau, told Reuters.

Some of them may have already had their businesses re-opened, but will face more severe penalties if they repeat their mistakes, Shisema said.

Under the new proclamation, retailers face closure, heavy fines and jail time if found guilty of repeated transgression, and are obliged to list prices for routine inspection.

About 103 businesses have already been closed down in Addis Ababa since Jan 6, according to official figures. Authorities have said more items will be subject to an upper price limit in the coming weeks.

COLLUDING TO RAISE PRICES

The Director of Ethiopian Revenue and Customs Authority, Melaku Fenta, said earlier this month that some retailers had raised prices blaming global price increases and the devaluation although such factors had had no influence on the availability of their products.

Addis Ababa devalued the birr by 16.7 percent in September, a move that was welcomed by the International Monetary Fund.

Global food prices hit a record high last month, outstripping the levels that sparked riots in several countries in 2008, and key grains could rise further, according to the United Nations.

During the 2008 food crisis, riots broke out in countries from Egypt to Haiti. Import prices jumped, forcing many countries' trade balances into a deep and costly deficit, and several governments in Asia imposed export restrictions on rice.

Kassa Getu, head of trade and industry promotion in the capital's Bole area, said 46 of the 103 retailers affected were in his district.

They had inflated prices beyond the cap. There are ordinary shops, restaurants and other outlets among them, he told reporters.

Ethiopia's annual inflation rate slowed to 10.2 percent in November from 10.6 percent the previous month, but retail prices of some food items such as bread have doubled over the past year.

It targets an annual inflation rate of 6 percent over the next five years after hitting a high of 64.2 percent in July 2008, before entering a period of deflation from July to October last year.