Prices continue skyrocketing

ANNUAL inflation rate rose for the 14th consecutive month in December, as observers expressed fears that higher food and energy costs will continue to lift prices in the economy in the coming months.
Year-on-year inflation rate rose to 19.8 per cent in December, from 19.2 per cent in November, the National Bureau of Statistics (NBS) said in a statement on Monday.

Economists say inflation will continue to rise this month following last week's decision by regulators to approve hike in electricity charges by 40.29 per cent, while food prices are not stable.
The 'Daily News' random survey on Monday established that prices of rice have gone up by almost 1,000/- per kilogramme, selling between 2,000/- and 2,500/- a kg.
Traders attributed the rise in rice prices to low supply from major source including Shinyanga and Kilimanjaro regions due to destructive rains. Traders were now relying on Morogoro and Mbeya regions. The Bank of Tanzania (BoT) Director of Economic Research and Policy, Dr Joseph Masawe said "the effect of the hike of power tariffs is a long term phenomenon, but the assessment is crucial to determine economic growth patterns." 

NBS said in a report on Monday that energy costs have increased by 41 per cent in December, compared to 39.2 per cent in previous month. The Confederation of Tanzania Industries (CTI) Chairman Felix Mosha said the institution was against the decision to increase power tariffs.

"The move will impact negatively the competitiveness of the manufacturing sector in the (East African) region, as goods from Tanzania are going to be more expensive due to high electricity costs," he said. Under the new rates, customers using over 50kWh (general use) charges are up from 157/- to 221/- per unit. High voltage users (mining companies, industries and factories) rate has gone up from 84/- to  118/- per unit.
Humphrey Moshi, professor of economics at the University of Dar es Salaam said: "Inflation rate will continue to rise in Tanzania over the coming months, because the rains have been erratic and global oil prices are still high. "The recent hike in power tariffs will also push consumer prices up."

Inflation rose throughout East Africa for most of 2011, driving interest rates through the roof, unsettling local bond markets and causing social tension and street protests in Uganda. However, the rates of inflation in Uganda and Kenya appear to be going down, after adoption of aggressive tightening of monetary policy in the two countries.
In Kenya and Uganda food prices have started to ease. The decline of Kenya inflation to 18.9 per cent from 19.7 per cent in December was attributed mainly to food index which went down to 25 per cent.  In Uganda, the prices for goods and services also dropped to 27 per cent in December from 29 per cent in the previous month on the back of low food prices that climbed down to 20.4 per cent from 25.9 per cent.
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