17 July 2012

Tanzania: June Inflation Declines to 17.4 Percent

ANNUAL inflation in June dropped slightly to 17.4 from 18.2 per cent of previous month, thanks to declining price of rice, the National Bureau of Statistics (NBS) said on Monday.The statistics body said that food and hotel inflation index went down from 24.5 to 22.9 per cent, mainly because of the dropping price of rice.

NBS said the declining headline inflation rate last month "explains that the speed of price increases for commodities in June 2012 has decreased compared to the speed recorded in May 2012."The statement further showed that energy index slightly dropped from 21.2 per cent of earlier month to 20.5 per cent in June while non food inflation stayed at the same level of 10.5 per cent.

However, the overall index went up to 130.06 in June, 2012 from 110.79 recorded in June, 2011.The Ministry of Finance and Economic Affairs, Dr William Mgimwa, told the ongoing Bunge session in Dodoma that the inflation is mainly being pushed up by rice prices and efforts have to be made to increase production of the main staple food.

"The food basket is pushed up mainly by demand of rice," Dr Mgimwa said, adding that the cost of production was also another factor that pushed up the Consumer Price Index (CPI) due to dependence on furnace oil to generate electricity.

He said the government was determined to tame inflation by reducing structural based costs that constitute the main input expenses that fuel inflation.

On the other hand, Mzumbe University's Dar es Salaam Business School Senior Lecture, Dr Honest Ngowi, earlier said so long as the rate is double digit it remains bad for the economy. "So long as the rate is double digit, it is still higher and it is bad for the economy," Dr Ngowi said, "the little decline won't be felt at all."

The snail pace at which inflation descends is expected to continue after the Energy and Water Utilities Regulatory Authority extended the power tariffs increase of 40.29 per cent to October. The rate was previously scheduled to end in July.

"The power hike has far reaching effects...in most barber shops and women saloons prices have gone up even before the usage of new tariffs starts," a Dar resident Leonard Joseph said.

In East African region, Kenya has the best inflation rate at single digit after it dropped from 12.22 per cent to 10.05 per cent in June while Uganda's has slowed down slightly to 18 per cent from 18.6 per cent.

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