Food price inflation in Ethiopia - A case study of price transmission and unofficial trade from Djibouti, Kenya and Sudan to Ethiopia.

Abstract: During the recent global food price crises, in 2008 and 2011, Ethiopia had experienced an extreme inflation. The effect on long-term has been shown to determine the domestic prices which is a surprising result for a country like Ethiopia with a little international trade. However, the unofficial-trade has become an increasing matter in the region. By comparing food price data from Ethiopia, Djibouti, Kenya and Sudan over several years this thesis aim to test the price transmission between cities close to the border and by this state that the prices were transmitted by the unofficial trade. The overall result shows that the prices on the Ethiopian domestic markets are closer correlated with the prices in Addis Ababa than to the prices at the markets in Djibouti, Kenya and Sudan.