What!? huh!? Watanzania wamekuwa wakilalamika hali ngumu ya maisha tangu JK alipoingia madarakani, na katika muda wote huo BoT walikuwa kimya leo ndio wanaamua kutoa onyo kwa wananchi! BoT warns of hard times as inflation bites By WILFRED EDWIN THE EAST AFRICAN Special Correspondent Increases in the prices of food, fuel, electricity and water are hampering government efforts to contain inflationary pressures, spelling tougher economic times ahead. These four crucial items have faced an increase in inflation of 10.1 per cent in January 2008 as compared with a December 2007 rise of 6.6 per cent. National Bureau of Statistics data shows that annual inflation rate for the year ended January 2008 increased to 8.6 per cent compared with 6.4 per cent registered for the year ended December 2007. The overall index increased from 135.7 per cent in January 2007 to 147.4 per cent in January 2008. Inflation for the month of January 2008 rose by 3.4 per cent as compared with 1.3 per cent registered during December 2007. According to NBS, the overall index increased from 142.5 per cent in December 2007 to 147.4 per cent in January 2008. These increase was driven by the increase of food prices by 5.2 per cent and fuel power and water by 1.9 per cent. Food items that contributed to such price increases included cereals, potatoes, cooking bananas, vegetables, fruits, meat, chicken, fish, beans, cowpeas, sugar and milk. Non-food items that saw such increase in prices were electricity, kerosene and charcoal, and petrol, diesel and car batteries. Prices for educational needs such as school fees and notebooks, mineral water and other bottled drinks, rents, furniture, shaving creams, cough syrup, radio and radio cassettes and handbags also contributed to the inflationary pressure. However, the Bank of Tanzania has warned that in the coming months, inflationary pressures should also be expected to be driven by the recent increase in electricity tariffs, the rise in wages and salaries, and the persistent increase of international oil prices. In addition, the recent upward pressure on international food prices due to increased demand for bio-fuels, will take its toll on imported food prices, which will in turn exert an upward pressure on domestic inflation. BoT said in its mid-term review of the monetary policy statement that it is determined to implement prudent policies to ensure that money supply in the economy is in line with the production of goods and services. Otherwise, too much liquidity will create an upward pressure on domestic prices leading to inflation. The central bank says that the government is taking measures to address the looming food shortages in the country. It first conducted an in-depth assessment of the food supply situation in the country. This indicated that 21 districts were experiencing shortages and would need immediate supply of food relief. By the end of January 2008, the government had supplied a total of 625.8 million tonnes of food. Secondly, import tariffs on food grains were waived to promote food imports by the private sector in a bid to strengthen domestic food supply. Plans are underway to import 300,000 tonnes of cereals to ensure that the strategic grain reserve is adequate. The review indicates that the overall fiscal performance for Tanzania mainland during the first six months of 2007/08 was on track, with strong growth in revenue collections. BoT says that Tanzania has to promote export-led economic growth as an effective poverty-reduction strategy. In the past several decades, countries that have grown rapidly and reduced poverty sharply are those that have pursued export expansion, particularly of processed and manufactured products.