ET Inflation Rate YoY: November 2025 Analysis and Macro Outlook
Key Takeaways: Ethiopia’s inflation rate eased to 11.70% YoY in November 2025, down from 13.20% in October and below the 12.80% consensus. This marks the lowest inflation reading since January 2025’s 17%. Core inflation pressures remain elevated but show signs of moderation amid tighter monetary policy and easing food prices. External risks from geopolitical tensions and currency volatility persist, while fiscal consolidation efforts continue. Financial markets reacted cautiously, with ETB stabilizing and bond yields edging lower. Structural inflation drivers linked to supply constraints and currency depreciation remain key challenges for policymakers.
Table of Contents
The latest inflation data for Ethiopia (ET) released on November 10, 2025, shows a year-over-year (YoY) inflation rate of 11.70%, a notable decline from October’s 13.20% and below the market estimate of 12.80%. This figure is the lowest since January 2025’s 17%, signaling a gradual easing of price pressures after a sustained period of elevated inflation. The data, sourced from the Sigmanomics database, covers the temporal scope of January to November 2025, providing a comprehensive view of inflation dynamics over the past 11 months.
Drivers this month
- Food and beverage inflation eased by 1.50 percentage points, reflecting improved harvests and supply chain normalization.
- Energy prices remained stable, contributing 0.30 percentage points to overall inflation.
- Core inflation components, including housing and transportation, moderated slightly but remain sticky at 9.80% YoY.
Policy pulse
The current inflation rate remains above the National Bank of Ethiopia’s target range of 8-10%, but the downward trend supports the central bank’s recent tightening cycle. The monetary stance, including higher policy rates and liquidity controls, appears to be gradually curbing demand-driven inflation.
Market lens
Immediate reaction: The ETB currency strengthened 0.40% against the USD within the first hour post-release, while 2-year government bond yields declined by 15 basis points, reflecting improved inflation expectations and reduced risk premia.
Examining core macroeconomic indicators alongside inflation reveals a mixed but cautiously optimistic picture. GDP growth estimates for 2025 hover around 5.50%, supported by agriculture and manufacturing sectors. However, unemployment remains elevated at 18%, constraining wage growth and consumer spending. The fiscal deficit narrowed to 4.20% of GDP in Q3 2025, down from 5.10% in Q2, reflecting government efforts to rein in spending and improve revenue collection.
Monetary Policy & Financial Conditions
The National Bank of Ethiopia has maintained a restrictive monetary policy stance since mid-2025, raising the policy rate by 150 basis points year-to-date. Liquidity measures and tighter credit conditions have dampened inflation expectations. The interbank rate averaged 12.50% in November, up from 11.80% in September, signaling tighter financial conditions.
Fiscal Policy & Government Budget
Fiscal consolidation remains a priority amid inflationary pressures. The government’s budget deficit target of 3.80% of GDP for 2025 is ambitious but achievable given recent revenue improvements and expenditure controls. However, risks from external debt servicing and subsidy costs persist.
External Shocks & Geopolitical Risks
Geopolitical tensions in the Horn of Africa and global commodity price volatility continue to pose upside risks to inflation. The recent spike in global wheat prices and intermittent border disruptions have pressured food prices. Currency volatility linked to foreign exchange shortages also remains a key concern.
Drivers this month
- Food inflation contribution: -1.20 percentage points YoY
- Energy prices stable: 0.30 percentage points YoY
- Housing and transport: 0.80 percentage points YoY
Policy pulse
The inflation rate’s decline aligns with the central bank’s tightening measures, which began in Q2 2025. The current reading suggests the policy is effective but requires sustained vigilance to anchor expectations.
Market lens
Immediate reaction: ETB/USD spot rates appreciated 0.40%, while 2-year government bond yields fell by 15 basis points, indicating improved investor confidence and lower inflation risk premia.
This chart highlights a clear downward trend in inflation, reversing a six-month upward streak. The moderation signals easing cost pressures but underscores the need for continued policy support to sustain gains.
Looking ahead, Ethiopia’s inflation trajectory will depend on several factors. The base case scenario (60% probability) anticipates inflation stabilizing around 10-11% by Q1 2026, supported by continued monetary tightening and improving supply conditions. A bullish scenario (20% probability) sees inflation falling below 9% if global commodity prices ease and fiscal discipline strengthens. Conversely, a bearish scenario (20% probability) projects inflation rising above 13% if geopolitical tensions escalate or currency pressures intensify.
Structural & Long-Run Trends
Long-term inflation dynamics in Ethiopia are shaped by structural factors such as currency volatility, supply chain inefficiencies, and fiscal deficits. Persistent foreign exchange shortages and reliance on imports for key commodities keep inflation vulnerable to external shocks. Structural reforms aimed at improving productivity and diversifying the economy are critical to achieving sustainable price stability.
Risks and Opportunities
- Upside risks: Renewed conflict, currency depreciation, global commodity price spikes.
- Downside risks: Successful fiscal consolidation, improved harvests, stronger monetary policy transmission.
- Opportunities: Enhanced export performance, foreign investment inflows, and infrastructure development.
Ethiopia’s November 2025 inflation print of 11.70% YoY signals a welcome easing of price pressures after a challenging year. While the decline is encouraging, inflation remains above the central bank’s target, requiring continued policy vigilance. Structural challenges and external risks underscore the need for coordinated monetary, fiscal, and structural reforms. Financial markets have responded positively, reflecting improved confidence in the inflation outlook. Going forward, balancing growth and price stability will be key to Ethiopia’s macroeconomic resilience.
Key Markets Likely to React to Inflation Rate YoY
Inflation data in Ethiopia significantly influences local currency strength, bond yields, and equity market sentiment. Key tradable symbols historically correlated with inflation trends include the ETBUSD forex pair, government bond ETFs, and select stocks sensitive to inflation and monetary policy shifts.
- ETBUSD – The Ethiopian Birr’s exchange rate against the USD reacts sharply to inflation surprises and monetary policy adjustments.
- ETBANK – Major Ethiopian bank stock, sensitive to interest rate changes and inflation expectations.
- ETAGRI – Agriculture sector stock, influenced by food price inflation and supply conditions.
- ETBTC – Cryptocurrency pair reflecting alternative asset demand amid inflation uncertainty.
- USDZAR – South African rand pair, often correlated with regional inflation and risk sentiment.
Inflation Rate YoY vs. ETBUSD Since 2020
Since 2020, Ethiopia’s inflation rate and the ETBUSD exchange rate have shown a strong inverse correlation. Periods of rising inflation coincide with ETB depreciation, while inflation easing aligns with currency stabilization. For example, the peak inflation of 17% in January 2025 corresponded with ETBUSD weakening by 8% over the prior six months. The recent decline to 11.70% has supported a 4% ETB appreciation since October 2025, underscoring the currency’s sensitivity to inflation dynamics.
FAQs
- What is the current Inflation Rate YoY for Ethiopia?
- The latest inflation rate for Ethiopia is 11.70% year-over-year as of November 2025, down from 13.20% in October.
- How does Ethiopia’s inflation compare historically?
- Inflation has declined from a peak of 17% in January 2025, marking a steady easing trend over the past 10 months.
- What are the main risks to Ethiopia’s inflation outlook?
- Key risks include geopolitical tensions, currency volatility, and global commodity price shocks that could push inflation higher.
Takeaway: Ethiopia’s inflation is easing but remains elevated, requiring sustained policy efforts and structural reforms to secure long-term price stability.
The November 2025 inflation rate of 11.70% YoY marks a significant decline from October’s 13.20% and is well below the 12-month average of 14.30%. This downward trajectory reflects easing supply-side bottlenecks and the impact of monetary tightening. Compared to January 2025’s peak of 17%, inflation has moderated by 5.30 percentage points over 10 months.
Monthly inflation prints show a consistent deceleration since mid-2025, with the largest drops in food and transport categories. Core inflation remains elevated but stable, suggesting underlying price pressures are persistent but contained.