Dar es Salaam — The annual headline inflation rate in Zanzibar declined to 8% in August this year from 9.4% recorded in July.
The Bank of Tanzania (BOT) said the reduction was mainly driven by a decrease in annual food inflation.
"Annual food inflation eased mainly due to a decrease in rice and sugar prices which were mainly influenced by tax exemptions granted by the government during the holy month of Ramadan," the BOT's governor, Prof Benno Ndulu said in a monthly economic review report.
Ndulu said the decline in rice prices since May was attributed to seasonal factors. "On month-to-month basis, average wholesale prices of the selected food crops decreased except for beans."
He said in annual basis, the price of rice registered the highest increase due to high demand in both local and regional markets. "However, the annual food inflation eased from 6.7% registered in July 2012 to 5.7% in August this year," he said.
Ndulu added that, the increase in fish price led to the increase of month-to-month food inflation in a small Islands of Zanzibar up from2.7% in the preceding month to 2.9% in August 2012.
On the other hand, annual non-food inflation declined from 13.6% recorded in the year ending July 2012 to 11.7% in August this year. "The decline was mainly associated with a decline in cement prices," Prof Ndulu said.
The increase in road license fees announced by the Tanzania government during its 2012/13 budget has however increased month-to-month non-food inflation from negative 0.1% registered in July 2012 to 0.1%, the report said.