June  23, 2009

ADDIS ABABA (Reuters) - Ethiopia's annual inflation rate fell to 14.2 percent in May from 23.4 percent in April, in line with slowing inflation around the east African region, the government said on Tuesday.

Inflation in the Horn of Africa nation had hit a high of 64.2 percent in July 2008, driven by high food and fuel prices.

Ethiopian Prime Minister Meles Zenawi has said a halt on government borrowing and a rise in bank reserves is underpinning the steadily declining rate in sub-Saharan Africa's second most populous nation.

The government hopes inflation will reach single figures by September.

The Ethiopian Central Bank also instructed private banks to restrict borrowing.

The global recession has slashed demand for Ethiopia's agricultural exports and power cuts have ravaged business, fueling a foreign currency shortage.

Ethiopia says it expects growth of about 10 percent in 2009. But the International Monetary Fund has predicted 6.5 percent.