Inflation drops slightly as commodity prices remain 'stable'

The inflation has slightly dropped by 0.3 percentage points to 19.4 per cent, thanks to slackened speed of price increase during the month of February that cushioned electricity price hike.

This is a second month in line the inflation to drop (see chart).

The National Bureau of Statistics (NBS) on Thursday attributed the decrease to food and non alcoholic beverages rate which slid to 26.7 per cent last month compared to 27.8 per cent in January.

"The decrease indicates a low speed of commodity price increase in February compared with January," NBS said in the statement.

On food consumed at home and away, inflation climbed down to 25.5 per cent from 26.2  in January while the yearly index change for non food products remained steady at 11.8 per cent in the two months.

The energy inflation jumped to 33.5 per cent in the month under review from 30.1 per cent of previous month: "The increase is highly attributed to the increase of price of electricity by 36.7 (40.29 per cent) per cent," the report indicates.

The consumer price index (CPI) is used for deciding the country's rate of expansion while consumption determines the saving and investment rates of an economy to determine the Gross Domestic Product (GDP) growth pattern.

Two days ago, the International Monetary Fund (IMF) predicted a drop in inflation to a single-digit towards the end of the year.

But economists say the 40.29 power hike will impact on consumer spending patterns as it will weaken their purchasing power.

Dr Honest Ngowi of Mzumbe University's Dar es Salaam Business School said power tariff increment pushed up production costs.

"The 7.0 per cent growth projection by the IMF is too optimistic. A 6.0 per cent prediction or even slightly below that is more realistic," he said.

Dr Haji Semboja of the University of Dar es Salaam was in support of  'favourable and stable economic growth."
Source: The Daily News,, reported by Abduel Elinaza
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