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Tanzania inflation set to rise even more

Discussion in 'Biashara, Uchumi na Ujasiriamali' started by EMT, Dec 17, 2011.

  1. EMT

    EMT JF-Expert Member

    Dec 17, 2011
    Joined: Jan 13, 2010
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    Tanzanians look set to suffer even higher prices in coming months analysts said, after inflation rose for the 13th consecutive month in November on the back of higher food and energy costs. Inflation has been rising throughout East Africa for most of 2011, driving interest rates through the roof, unsettling local bond markets, and causing social tension and street protests in Uganda.

    The National Bureau of Statistics (NBS) said the year-on-year inflation rate rose to 19.2 percent in November from 17.9 percent in October, mirroring rising inflation across east Africa. Rainfall has an outsized influence on inflation on the agrarian economies of east Africa, with good rains leading to good harvests and lower prices. Poor rains across east Africa for much of this year have affected food security and electricity output, triggering spikes in the levels of inflation and threatening economic growth.

    "I don't see the inflation rate going down in the short term ... I wouldn't be surprised if the annual inflation rate exceeds 20 percent in December," Honest Ngowi, an economics lecturer at Mzumbe University Business School, told Reuters. "We have been unable to tame the inflation rate. If we are not careful, it may go out of control. We are addressing the wrong problem - Tanzania mainly has a structural inflation, but the central bank intervened by tightening money supply as if it's a monetary inflation. That's a wrong solution."

    Food and non-alcoholic beverages rose 26.1 percent for the twelve months year ended November from 24 percent in October. Among food prices that increased were the national staple maize, rice, bread, wheat flour, cassava, meat, oil, Irish potatoes, sweet potatoes and sugar. Food and non-alcoholic beverages have a 47.8 percent weighting in the country's basket of goods used to measure inflation.

    "It's difficult to predict what will happen next. If we don't get enough rainfall, this will affect food harvest but if we get too much rainfall, this could cause flooding and that's also not good either," Ephraim Kwesigabo, director of population census and social statistics at NBS, told Reuters. NBS said the year-on-year inflation rate for energy rose to 39.2 percent in November from 37.4 percent in October. Stripping out food and energy prices, the annual inflation rate edged up to 8.8 percent in November from 8.5 percent in October. On a monthly basis, consumer prices rose 1.4 percent in November from October.

    NBS said higher food prices were the main cause of the rising inflation rate. "This trend is highly attributed to the increase of food prices ... Changes in the prices of food items have a big impact on CPI dynamics due to the fact that Tanzanians spend about half of their income on food items," NBS said in an analysis on its website on Friday. "Prices of food items have been increasing tremendously from July to November 2011, which resulted in high food inflation rates ... Since the National Consumer Price Index in Tanzania is food driven, changes in prices for food items have highly contributed to an increase in national inflation rates over the period."

    NBS said high costs of electricity used to process food and rising fuel costs for transportation of food were also seen pushing up prices. "Most of the neighbouring countries like Uganda and Kenya have recorded higher inflation rates than Tanzania. Importation of food items from these countries has resulted into imported inflation," said NBS. The bureau advised the government to stabilise electricity supply and improve infrastructure to ensure food was adequately distributed from areas of surplus to those with deficits.

    Source: http://af.reuters.com/article/commoditiesNews/idAFL6E7NG24C20111216?sp=true
  2. D

    DAR si LAMU JF-Expert Member

    Dec 17, 2011
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    ...And still, we are hearing talks of increasing electricity tariffs. Some people should be consulting on these issues.

    ...Anyways, we need to raise productivity in food production and produce even more and improve distribution channels, both public and private. We've got many hungry neighbors, as that remains the case, we'll always see price spikes, as food exportation and smuggling takes place.

    ...Its rather a matter of smart planning, which, we can not run away from.

    SUPERUSER JF-Expert Member

    Dec 17, 2011
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    I think what caused this inflation is a combination of 1.power rationing
    2.higher oil prices
    3.depreciation of TZS
    4.poor governance(regulatory authorities)
    Increasing food prices comes after the above...after all there is plenty of food in Tanzania right now esp maize(which is the main food crop)...ikumbukwe kua serikali imeshindwa kununua mahindi hadi yanaoza uko Songea....What about sugar?..yani apa ndo tumeshindwa kutumia a simple law of demand/supply...all the sugar inapelekwa kuuzwa kenya then unafikir bei uku TZ itakuaje