Ethiopia inflation rises to 10.6

ADDIS ABABA (Reuters) - Ethiopia's annual inflation rate rose to 10.6 percent in October from 7.5 percent in September on rising prices of food and imported goods, the statistics office said on Monday.

The Central Statistical Agency (CSA) said the overall food price index in Africa's second most populous nation increased 5.4 percent in October, with all food components except cereals rising.

Ethiopians are watching for the effects of the birr currency's devaluation in September on inflation, which rose to record levels in 2008 and 2009 on the back of global food and fuel prices.

The CSA said non-food inflation rose by 18.7 percent, with imported goods like cigarettes, construction materials and clothing showing big increases.

"Cigarettes and tobacco increased by 33.9 percent, clothing and footwear by 25.1 percent, house rent, construction material, fuel and power by 16.5 percent," the CSA said in a statement.

The Horn of Africa nation devalued the birr by 16.7 percent in September and targets annual inflation of 6 percent over the next five years.

After the high rates of inflation in 2008 and 2009, the rate plummeted from July 2009 to October 2009 after the government stopped state borrowing and increased bank reserves.

Analysts say there is a risk inflation will continue to rise after the devaluation.