Inflation drop gives little relief to consumers

The inflation has gone down slightly by 0.1 percentage points to close the month of January at 19.7 per cent, giving relief, albeit insignificant, on consumer spending.

 The National Bureau of Statistics (NBS) data released on Wednesday show that kerosene and charcoal prices went down by 2.3 per cent and 0.7 per cent, respectively pulling with it the Consumer Price Index (CPI).

“A small change in prices for charcoal has a big impact on the complied index for energy and fuels because charcoal accounts for more than half of 2.5 per cent of the total expenditure for energy and fuel,” NBS said in the statement.

The annual inflation rate for energy has decreased to 30.1 per cent in January from 41 per cent recorded last December to bring slight positive change.

However, Mzumbe University’s Dar es Salaam Business School Senior Lecture, Dr Honest Ngowi, the rate went down unexpected as a number of variables shows that goods and services prices are still high in the month under review compared to the previous month.

“So long the rate is double digit, it is still higher and it is bad for the economy,” Dr Ngowi said on Wednesday, saying, “The rate of inflation drop won’t be felt at all.”

He said the February inflation rate may increase further as it would factor in the impact of the new power tariffs increase of 40.29 per cent:

“The power hike has far reaching effects…in most barber shops and women saloons prices have gone up even before the usage of new tariffs starts, this is psychological.”

 The Lecturer also said it is hard task to reduce the level of inflation to the regional set rate that permit the macroeconomics convergence in East African partner states. The target inflation rate for EAC is between 5 and 6 per cent.

NBS figures, for food and non alcoholic beverage indicates that the monthly index climbed by 3.5 per cent while yearly figure stands at 27.8 per cent change.

The index is heaviest as it weight 47.8 per cent of CPI. The food index increase is attributed to increased prices of rice by 13.6 per cent, bread (2.4), wheat flour (3.9), meat (2.0), fish 95.2), fresh milk (2.7), eggs (3.4) and vegetable (5.6).

Others non-food items are men’s suit 9.7 per cent, primary school uniform (3.5), rents (6.5) car tyre (4.3) exercise books (4.8), private primary school fees (5.0), private secondary school fees (2.9) and toilet soap (6.5). The inflation eroded the purchasing power of the 100 shilling in September 2010 to 80/23 in January 2012.
Source:The Daily News, , reported by Abduel Elinaza
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