Decimal drop of inflation remain unfelt

Activity level and turnover at the Dar es Salaam Stock Exchange (DSE) have not changed much despite a slight two per cent decline in inflation between the first and second quarters of the year.

In various interviews with the ‘Daily News’ in Dar es Salaam, some analysts said the decline in inflation from 19.7 per cent in the first quarter to 17.4 per cent in the second quarter of the year has had little impact on businesses yet.

According to the Chief Executive Officer for Tanzania Securities, Mr Moremi Marwa, the activity level has not changed much. 

“When you look on market activity in the first quarter when inflation was on the range of 19 per cent and the second quarter when inflation dropped to around 17 per cent, activity level and turnover haven’t changed much,” Mr Moremi said, noting that it was difficult to find a direct correlation between inflation and DSE activities.

The National Bureau of Statistics monthly inflation rate for July is expected to be released today. 

Mr Marwa said that due to lack of diverse financial products, investors tend to invest in existing few options without much consideration on returns against inflation. 

The Chief Executive Officer for Dhow Financial, Prof Mohammed Warsame said yesterday that inflation had in the mid term affected people who have fixed incomes like employees, noting that business people might have increased prices of their goods and services to recover the loss.

He said that in the long run, inflation would be further contained by economic growth, though currently   infrastructure needs will support the economy and disinflation. He said stifling credit expansion is one way of slowing the growth of money supply in the economy.

A construction hardware dealer in Dar es Salaam, Moses Bagenda, who had received a bank loan prior to high inflation in January, said that when inflation skyrocketed in January this year, he felt the pinch through bank interest rates and eventual decrease in business.

Mr Bagenda said struggled with increased interest payments, having put his small house as collateral.

“My bank still calls me every month to follow up on their loan,” he said. Early this year, in a move to save the weakening shilling and curb inflation, the central bank introduced measures to tighten money supply in the economy and pump more foreign currency into the markets.

Source: The Daily News,http://dailynews.co.tz, reported by Orton Kiishweko

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