Inflation falls to 13.5% in September

Tanzania Inflation RateTanzania year-on-year inflation rate fell to one year low in September to 13.5 per cent from 14.9 per cent in August, the National Bureau of Statistics (NBS) said.

The central bank had earlier said it expects headline inflation to reach 10 per cent by the year’s end and fall into single digits by the end of the 2012/2013 financial year in June 2013. 

Tanzania’s inflation rate in September is almost two and half times higher than that of Kenya and Uganda which are 5.3 and 5.4 per cent respectively.

A year ago Tanzania’s rates were the lowest in the East African block at around 19 per cent while its neighbours were over 20 per cent. 

The NBS, Director of Population and Social Statistics, Mr Ephraim Kwesigabo, said there were a number of variables that explained the slow descending rate of Tanzania’s inflation compared to other East African countries including policy issues.

“Slow pace of the declining inflation rate can also be explained by other variables such as exchange rate, but mainly monetary policy issues,” Mr Kwesigabo told journalists.

He added: “Our report assists policy makers to strategise on course of actions,” the statistician said, adding “but it does not mean the situation is bad as the country still have the lowest cereals prices in the bloc.”

According to NBS, the average prices of a kilogramme of maize flour and rice in Tanzania last month were between 800/- and 1,000/-, and 1,200/- and 1,800/- respectively.

The prices in Tanzania shilling are still low compared to Uganda’s maize flour 1,200/- and rice 2,000/- and Kenya’s maize flour 2,000/- and rice of between 2,200/- and 3,000/-.

The better side of the last month rate was that core inflation, excluding food and energy, went down by 0.3 percentage points to 8.9 per cent from 9.2 per cent of August.

“Contrary to movement of this group, annual inflation rate for energy has increased to 19.4 per cent in September compared to 16.9 per cent recorded in August,” NBS press release issued yesterday shows.

It attributed energy cost increase to the price of petrol that was up by 11.4 per cent and diesel by 6.8 per cent from August to September 2012.

On food index, last month it dropped to 15.8 per cent from 18.5 per cent, however on nonfood slightly increased to 10.5 per cent from 10.3 per cent.

Economists were long urging that the country was using monetary tools to curb structural related inflation which according to them could not work.

“Our inflation is structurally based. This kind of inflation cannot be cured by the application of monetary policies,” Dr Honest Ngowi a senior lecturer with Mzumbe University said earlier.
Source: The Daily News,
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