Ethiopia is one of countries in Sub Saharan African with moderate economic growth in recentrnyears. The aim of this study was to examine the relationship between inflation rate and economicrngrowth in Ethiopia. The methodology employed in this study is the vector error correction modelrn(VECM). The series considered are consumer price index (as a proxy for inflation rate), realrnGDP (constant 2005 USD) (as a measure of economic growth) and openness. Annual data onrninflation rate, openness and real GDP for the period from 1992 to 2012 are obtained from thernWorld Economic Outlook (WEO) database of the International Monetary Fund (IMF). Arnstationarity test was carried out using the Augmented Dickey-Fuller (ADF) and Phillip-Perronrn(PP) tests. The null hypothesis of a unit root was not rejected for all series under considerationrnimplying that the series are all non-stationary in levels. The first differences of all series,rnhowever, were found to be stationary. For the period spanning from 1992 to 2012, there was onernco-integrating relationship between openness, inflation rate and economic growth. The estimatedrnlong run model shows that there exists strong inverse long-run relationship between inflation raternand economic growth. The estimated coefficient of the error correction term (0.0143) shows thatrnabout 1.43% of the short run disequilibrium in real GDP will be adjusted within a year. In thernshort run, one time lagged inflation rate has a significant negative impact on the current realrnGDP whereas two time lagged openness has a significant positive impact. The impulse responsernfunctions reveal that inflation rate and openness innovations have a positive impact on real GDP.rnThe results of Granger causality test show that a unidirectional causality was running fromrneconomic growth to inflation