16th October 10 Inflation drops to 4.5 pct – a five-year low The Guardian Reporter Tanzania`s year-on-year inflation rate slowed last month to its lowest level since November 2005, mainly due to weaker food prices, the National Bureau of Statistics said yesterday. It attributed the fall chiefly to the weakening of food prices. The bureau said that, at 55.9 per cent, food constituted the largest portion of the basket of goods the nation uses to calculate inflation "and a drop there sent the overall rate to 4.5 per cent in September from 6.6 per cent in August". "Food was the main reason for the fall in the inflation rate. Prices of items like rice actually fell," Ephraim Kwesigabo, director of population census and social statistics, told Reuters. According to NBS, rainfall had an outsized influence on inflation rates in East Africa because good rains lead to good harvests and lower prices. The region relies on rain-fed agriculture and drought in the past few years drove up inflation and hurt growth. "Food inflation rate has decreased to 4.5 per cent in the year ended September 2010 from 6.3 per cent in the year ended August 2010. Non-food inflation has also decreased to 4.7 per cent in the year ended September 2010 from 7.1 per cent in the year ended August 2010," noted the bureau. It added that food, drinks, clothing and transportation costs rose last month compared with the previous one. Analysts said they expected Tanzania's inflation rate to rise towards the end of the year due to the likelihood of the onset of dry weather and the weakening of the shilling. The currency has been easing steadily since the start of the year. It was quoted at 1,500/1,505 against the US dollar on Wednesday, down from 1,335 at the end of last year. "It is good news that the inflation rate has fallen, but I am surprised that the figure announced by the National Bureau of Statistics is that low," remarked Honest Ngowi, an economics lecturer at Mzumbe University's Business School in Dar es Salaam. "The inflation rate doesn't reflect the actual reality on the ground. Prices of most items, such as food and fuel, remain high and there is more government spending because of the October election," he said, adding: "It's almost a wonder that the inflation rate has declined this much." NBS said the monthly inflation rate rose by 0.2 per cent last month, the main reason being a 0.5 per cent increase in food prices. The main food items that contributed to the price rise included cereals, sweet potatoes, vegetables, fruits, fish and nuts. Aloyce Mwamanga, president of the Tanzania Chamber of Commerce, Industry and Agriculture, meanwhile said: "Consumer prices are starting to reflect the real value of products and services as we move away from inflated prices." He added: "When the price of a commodity is close to reality, then we become more competitive in the external market." Tanzania joins two of its four East African Community partner states, Kenya and Uganda, in having benign inflation rates this year partly made possible by good harvests on the back of adequate rainfall. Meanwhile tea output in Tanzania which is Africa's fourth-biggest grower of the leaf, may rise 6.1 percent in 2010-2011 because of expected better rainfall, the Tea Board of Tanzania said. Production in the 12 months through June may rise to 35,000 metric tons from 33,000 tons in 2009-10, Mathias Asenga, the board's director general said. "We expect that the weather will improve compared to last year when we experienced a drought," he said. "Improved rains will boost production." Last season's output surpassed the 32,000 tons produced in 2008-09, but fell below the initial forecast of 35,000 tons after the drought cut yields, according to the board. The 2010-11 crop will further be boosted by increased planting in the last few years, Asenga said without giving details. Four-fifths of Tanzania's tea is sold to foreign buyers including South Africa, the U.K., Netherlands, Pakistan, Germany, Ireland, United Arab Emirates and India. About half of the country's exports are channeled through the world's biggest tea auction in Mombasa. Tanzania's tea exports rose 24.4 percent last season to 28,064 tons from a year earlier, Asenga said. Export revenue from the crop climbed 59 percent to $56.97 million in 2009-10 because of higher prices and shipment volume, he said. A campaign is under way to encourage farmers to introduce the crop to areas bordering Kenya and to use more fertilizers, according to the board. Tanzania ranks behind in terms of tea production in Africa. THE GUARDIAN http://www.ippmedia.com/frontend/functions/print_article.php?l=22103 MY TAKE: Nina wasiwasi na inlation figure iliyotolewa hapo juu kama CCM wameweza kushusha inflation kwa kiasi hiko katika kipindi cha mwezi mmoja yaani september to October, kwanini muda woooote walishindwa na kuna kitu gani nyuma ya hiyo figure? Ninachoona ni hivi Kama CCM waliweza kuchakachua risiti za malipo ya ndege ya mama Kikwete, waliweza pia kuchakachua matokeo ya REDET na Synovate (pia kuzuia yale yaliyo credible!) Kwanini wasiweze kuchakachua inflation figures? Pia kama inflation figures zinaweza kushushwa ina maana mara nyingi huwa ni kwa sababu walanguzi mafisadi papa wanaohodhi uchumi huu kuachiwa ku-shoot up gharama za bidhaa! Jamani MSIDANGANYIKE! pigia CHADEMA haya yote yana mwisho wake!