Inflation has emerged as a significant economic challenge in Ethiopia, particularly in the Illu Abba Bor Zone, where its effects are profoundly felt by households and businesses alike. This study aims to identify and analyze the key determinants of inflation in this region using regression models. Data was collected from various sources, including government reports, economic databases, and household surveys, covering a range of variables such as money supply, consumer price index (CPI), agricultural output, exchange rates, and external economic factors.

The regression analysis revealed that several factors significantly influence inflation in Illu Abba Bor Zone. Notably, an increase in money supply was found to have a direct correlation with rising inflation rates, underscoring the impact of monetary policy in the region. Additionally, fluctuations in agricultural output emerged as critical determinants, highlighting the vulnerability of the local economy to agricultural productivity and climatic conditions. The study also identified the exchange rate and global commodity prices as significant external factors influencing inflationary trends.

The findings of this research provide valuable insights for policymakers and economic stakeholders, emphasizing the need for targeted economic interventions and sound monetary policies to mitigate inflationary pressures. By understanding the dynamics of inflation drivers specific to Illu Abba Bor Zone, this study contributes to the broader discourse on economic stability and sustainable development in Ethiopia. Future research should explore the long-term effects of these determinants on inflation and consider additional qualitative factors that may influence the region's economic landscape.