Inflation is one of those things everyone feels, but a few understands it. You hear people say, “Life is getting expensive,” or “money doesn’t buy a thing anymore.” That feeling and pressure in your pocket is what economists call inflation.

At its heart, inflation simply means prices of goods and services keep going up over time, while the value of money goes down. In simple terms, the same 1,000 francs that used to buy you a full meal, now it can’t even buy you half of it. That is because inflation reduces the purchasing power of money where it buys less than before.

To understand why inflation happens, you have to look at the relationship between money and goods in an economy. One of the biggest causes is when demand is higher than supply. Imagine many people want tomatoes, but there are few tomatoes in the market, instantly prices will rise. 

This is very common in Rwanda during dry seasons when food supply drops. Another cause is rising costs of production. When fuel prices increase globally like it is now, transport becomes expensive, and that cost is passed to food, construction, and almost everything else. That is why even if you don’t buy fuel, you still feel its impact.

There is also the issue of imported inflation. Rwanda imports many goods like fuel, machinery, even some food. When global prices go up or the Rwandan franc weakens, everything imported becomes more expensive locally. Around the world, countries have been dealing with this since the COVID-19 period and conflicts like the Russia–Ukraine war, which pushed up energy and food prices globally. Even big economies like the United States and countries in Europe saw high inflation in recent years, forcing central banks to raise interest rates to control spending.

In Rwanda, inflation has been relatively controlled compared to global spikes, but it is still very real. Data from the National Institute of Statistics (NISR) shows inflation moving between about 6% and 8% in 2025, depending on the month. But those numbers don’t fully capture the lived experience. Transport costs, for example, rose by over 17%, while restaurant and hotel prices also increased significantly. That explains why many people feel like everyday life is getting more expensive, even when inflation is said to be “under control.”

The impact of inflation on the Rwandan economy is deep and personal. For ordinary citizens, it means life becomes harder to manage. Food prices rise, rent increases, and transport takes a bigger part of income. For small businesses, it creates a difficult situation where costs go up but customers are not able to spend more. A small restaurant in Kigali, for example, may pay more for ingredients and fuel but hesitate to raise prices too much because customers will disappear. So profit margins shrink. 

People also lose trust in saving money because its value keeps dropping over time. Instead of saving, many prefer to spend quickly or invest in assets like land, which hold value better.

The government, through the National Bank of Rwanda, has been actively trying to manage inflation. One of the main tools is interest rates. When inflation rises, the central bank increases interest rates to make borrowing more expensive. This reduces spending in the economy and helps bring prices down. Rwanda has used this strategy in recent years, following a global trend where central banks tightened monetary policy to fight inflation.

At the same time, the government is investing in local production by instilling the MADE IN RWANDA campaign, especially agriculture and manufacturing, to reduce dependence on imports. The idea is simple: if Rwanda produces more of what it consumes, it will be less affected by global price shocks.

Still, inflation is not something that can be completely eliminated. It is part of every growing economy. The real goal is to control it so that it does not hurt people too much.

In the end, inflation in Rwanda today reflects a country that is growing, connecting to the global economy, and facing both opportunity and pressure at the same time. Of course prices are rising but so is economic activity. The real challenge is making sure that growth translates into better living conditions, so that when the economy moves forward, people don’t feel left behind.

Read more in Kinyarwanda here: https://www.wazoplus.com/article/ubuzima-bwarahenze-cyane-ukuri-kwihishe-inyuma-yizamuka-ryibiciro-mu-rwanda-66b4711b

Journalist: NDUWE SUGIRA Alain Bertin