16 October 2012

Tanzania: Bring Inflation Down - More

THE National Bureau of Statistics (NBS) announced that the annual inflation rate continued to slow down, attributing the trend largely to the drop in food prices.

Despite the slow rate in the fall of prices in the economy, it is still encouraging that inflation rate had been on the decline for the ninth straight month in September. It should be remembered that at the beginning of the year, the annual headline inflation rate was around 20 per cent.

According to NBS year-on-year inflation fell to 13.5 per cent in September from 14.9 per cent in August. NBS noted that annual increases in food and non-alcoholic drink prices eased to 15.6 per cent from 18.8 per cent. The trend, however, is against projections by the Bank of Tanzania (BoT), the Treasury and other institution that inflation rate may go back to single digit in the near future or at least by the end of the year.

This is the harvest season for most food crops including maize, beans and paddy, which are normally drivers of the country's inflationary trends. There were hopes that by this time inflation rate could have hit single digit, but this goal has been elusive.

There are also claims that despite figures being presented by NBS the situation on the ground is quite different. In Dar es Salaam, for example, the price of maize flour had remained between 1,000/- and 1,500/- at retail outlets, while rice sells at between 1,700/- and 2,500/-, since the beginning of the year.

Despite repeated campaigns by the government to move maize out of state-owned godowns to millers and other stakeholders as a strategy of pushing down prices, prices are still high. Prices of sugar and rice, also the main drivers of the inflation rate, have remained high, despite various incentives to importers including tax waivers.

The government and other relevant authorities should now draw up radical measures to tame inflation. The measures must include boosting agricultural production and developing the infrastructure, especially roads and the railway network.

There are reports that mountains of maize bags are piled up in Ruvuma and Rukwa for lack of transport to places having food deficit.

In those areas some farmers in villages are reportedly selling maize and other food crops at throw away prices for lack of markets. These are factors that need to be addressed critically.

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