By Bethelehem Solomon
Following Ethiopia’s adoption of a market-based free trade system, some traders have continued to impose excessive and unreasonable price hikes on consumers.
Although the government has stated that it is carrying out various monitoring activities to stabilize the market, in practice, the prices of goods continue to skyrocket day by day.
In Addis Ababa, in particular, despite repeated announcements regarding the expansion of "Sunday markets," requirements for traders to post price lists, and the establishment of control systems to prevent consumers from paying above the listed prices, the actual prices of food, beverages, and other essential goods are rising rapidly instead of remaining stable.
It is recalled that Ethiopia previously undertook broad macroeconomic reforms, including allowing the foreign exchange rate to be determined by the market. While this free market system may be beneficial for domestic production growth and attracting foreign investment in the long term, it has directly caused a cost-of-living crisis, creating severe financial shortages and economic pressure on the general public.
However, it is well known that traders cite the rise in foreign exchange rates (the dollar) and adjustments to fuel prices as the reasons for these continuous price increases.
Nevertheless, economic experts point out that while the rise in dollar and fuel prices is a reality, the price increases imposed by traders on products are grossly exaggerated and far from reality.
Furthermore, they advise that even though the country follows a free market system, the government should intervene and make adjustments to the prices of essential goods and products, just as it makes tariff adjustments in the transport sector.
One of the issues frequently raised regarding the structural problems of the market is that even when factors used by traders to justify price hikes—such as the volatility of the dollar or international market fluctuations—are corrected, the prices of goods in Ethiopia are rarely seen returning to their original levels.
This means that while traders immediately and disproportionately increase the prices of goods when there is a slight rise in the dollar or fuel, they are generally unwilling to lower prices or maintain stability when costs decrease and the market stabilizes.
This problem is further exacerbated in the Ethiopian market because consumers lack access to accurate market information, and a few traders have the power to monopolize and dictate the prices of essential goods. Therefore, experts advise that the government must use law and regulation to curb this unreasonable profit-seeking carried out in the name of a "free market."
Furthermore, they warn that if the relevant government bodies do not monitor this practice and take strict measures, the purchasing power of the public will be completely eroded, leading to a severe social and economic crisis.
