Inflation now hovers around double digits THISDAY REPORTER Dar es Salaam TANZANIAS annual inflation rate is inching closer to double digits after rising to 9.8 per cent in August up from 9.5 per cent in July due to escalating oil and food prices, according to the National Bureau of Statistics (NBS). The annual headline inflation rate for the year ended August 2008 increased to 9.8 per cent compared to the 9.5 per cent that was registered in the year ended July 2008, a statement issued by the bureau said yesterday. The increase in the rate of inflation was mainly attributed to the increase of food, petrol, diesel, kerosene, bus fares and charcoal prices over the period, the statement said. Food contributes a weight of 55.9 per cent in the countrys economy basket of goods used to measure inflation. Tanzanias national consumer price index covers market prices of 207 items collected in 20 towns in mainland Tanzania. When contacted by this paper to comment on possible effects of the rising inflation to the nations economic growth, Finance and Economic Affairs Minister Mustafa Mkulo referred our queries to his Permanent Secretary, Gray Mgonja, who was also not available. However, independent economic experts warned that the record inflation in Tanzania could hurt the countrys growth if the rate continues its upward trend. Runaway global prices for fuel and basic commodities such as food have driven Tanzanias inflation rate to the brink of double digits. According to the NBS, the increase in the rate of inflation was mainly attributed to rises of food, petrol, diesel, kerosene, bus fares and charcoal prices over the period. From August 2002, the value of 100/- (and thus the purchasing power), has been decreasing, declining to 68/- and 29 cents in August 2008, said the statement. The government says it plans to increase the rate of economic growth this year from last years 7.3 per cent and to get inflation below the average 2007 level of 7 per cent by mid 2009. In an economic survey presented to Parliament ahead of his 2008/09 fiscal budget speech in June this year, Mkulo predicted the rate of growth would rise steadily in each year up to 2011. The economy will grow by 7.8 per cent in 2008, 8.1 per cent in 2009, 8.8 per cent in 2010 and 9.2 per cent in 2011,he said. Inflation will be kept below 7 per cent by the end of June 2009, he added, noting that average inflation in 2007 was 7 per cent. Analysts caution that Mkulos forecast could be derailed by soaring food and oil prices that are eating into economies worldwide, thus posing a serious challenge to growth as it fuels high inflation.