The National Bank of Rwanda (BNR) has projected that the country's inflation rate will reach 13.9% in 2026, before decreasing to below 8% in the second quarter of 2027. This projection was made by BNR Governor, Soraya Hakuziyaremye, who cited the increase in prices of goods and services, including a decrease in agricultural production, an increase in fuel prices, and the impact of global market challenges.
According to the National Institute of Statistics of Rwanda (NISR), the inflation rate reached 15.7% in August 2026, up from 14.5% in July. The prices of food and non-alcoholic beverages increased by 16.3%, while housing, water, electricity, gas, and other fuels increased by 20.4%. Transportation costs also rose by 24.2% in August.
Governor Hakuziyaremye explained that the first quarter of 2026 saw an inflation rate of 11.2%, compared to 7.3% in the same period of 2025. She attributed the increase to the rise in prices of goods and services, including food and fuel. The governor also noted that the inflation rate has exceeded the 8% target set by BNR for the first two quarters of 2026.
The BNR governor identified the increase in transportation and housing costs as major contributors to the inflation rate, while a decrease in agricultural production, particularly in the first cropping season, also played a role. The rise in fuel prices since March has also had an impact, driven by an increase in global oil prices and a rise in electricity tariffs last year.
The recent data shows that the inflation rate has continued to rise, with August 2026 seeing the highest rate so far this year. The increase in transportation costs, housing, and fuel prices have been major contributors to this trend. BNR is also concerned about the potential for "second-round effects," where the initial increase in prices leads to changes in consumer and business behavior, causing prices to continue rising.
To combat inflation, BNR is using monetary policy tools to mitigate the impact and help bring the inflation rate back to the medium-term target of 5%. However, Governor Hakuziyaremye noted that monetary policy alone is not enough to address the issue, particularly if it is driven by supply-side factors or global price shocks. The government has implemented other measures, including subsidies on fuel and fertilizer prices, promoting the use of public transportation, and establishing a strategic reserve of petroleum products.
Despite the current high inflation rate, BNR projects that it will decrease in 2027, although this forecast may be affected by climate-related shocks to agricultural production, changes in global oil and food prices, and ongoing conflicts in the East African region. The governor emphasized that the bank will continue to monitor the situation and take necessary measures to keep inflation under control.
Key points
- The National Bank of Rwanda projects an inflation rate of 13.9% in 2026, with a decrease to below 8% in the second quarter of 2027.
- The inflation rate has been driven by an increase in prices of goods and services, including food, fuel, and transportation costs.
- The government has implemented measures to mitigate the impact of inflation, including subsidies on fuel and fertilizer prices.
