By Tsegaye Tadesse

ADDIS ABABA (Reuters) - Ethiopia said on Thursday it had lifted value-added and turnover taxes on food grains and flour to reduce the impact of high inflation on poor citizens.

In a major economic speech to parliament this week, Prime Minister Meles Zenawi blamed global price rises for the country's inflation rate, which currently stands at 20 percent.

"Now that 15 percent Value Added Tax (VAT) and turnover tax are lifted, a proportional reduction in the price of bread is expected effective immediately," the Ministry of Finance said in a statement.

The move came into effect on Wednesday.

"It was found necessary to lift the tax burdens on food grain and bread flour due to the fact that food grains constitute more than half of the country's consumption."

Ethiopians have protested in recent weeks after traders hiked bread prices by a quarter and salt by 100 percent.

The finance ministry urged members of the public to report any unscrupulous businesses that engaged in illegal practices.