17 January 2013

Tanzania: Hopes of Single Digit Inflation Dashed

Photo: IITA/Flickr
A market in Nigeria showing traders selling red pepper, oil palm, "parboiled cow skin", cow meat, clothing materials,

EXPERTS say the annual headline inflation that has stagnated at 12.1 per cent in the past two months was authentic but far from the policy goal of 5 per cent.

They also note that the average monthly declining rate of 0.63 per cent remains low and could dash the hope of arriving at the single-digit goal mid this year. It might take about ten months to match the neighbours --Kenya and Uganda -- whose inflation rates have kept a declining tempo.

A University of Dar es Salaam Senior Economics Lecturer, Dr Jehovanness Aikael, said the declining rate of about one per cent is acceptable as the figure was high, at 19.7 per cent at the beginning of last year.

"The dropping rate is of no concern at all, it could have been a concern if the rate dropped like Kenya and Uganda that is too fast to be realistic," Dr Aikael told the 'Daily News' through the phone.

The economist said given the current dropping rate, Tanzania would achieve a remarkable single-digit rate in the next two to three months. The Minister for Finance and Economic Affairs, Dr William Mgimwa, told journalists in Dar es Salaam that the inflation was projected to reach a single-digit, coming this June, without giving figure.

However, Mzumbe University's Dar es Salaam Business School Senior economics lecturer, Dr Honest Ngowi seconded the argument of his counterpart, cautioning however that the inflation for December is higher than the rest of EAC partner states'.

"It is still much far from the policy goal of single digit of about 5 per cent... although the decline is good, it remains at a snail pace," Dr Ngowi said. Also, he said, "talking to men and women in the streets, they do not feel the decline in their lives. Faster decline in inflation is needed to reach the policy goals but most importantly to ease people's hardships."

In the EAC, Dr Ngowi said, the bloc wants a single currency by December 2013: "I see it to be the same dream as that of 2012 when the single currency project could not see the light of the day. "If it is to be a reality this year, inflation in Tanzania has to decline fast to reach the inflation macroeconomics convergence criteria of about 4 per cent that is needed before embracing the single currency."

The National Bureau of Statistics (NBS) said in its report released yesterday that the country headline inflation of last December stagnated at 12.1 per cent, the similar rate recorded in November. But going by data visualization for the three east African state, it shows that the country inflation for the last one year dropped by 7.6 per cent from 19.7 of last January to 12.1 per cent of last December.

For instance, at the beginning of last year, Kenya's inflation rate was 18.9 per cent and Uganda's at 25.68 per cent while Tanzania stood at 19.8 per cent. However, at the end of last December, Nairobi and Kampala reduced their inflation rates to 3.2 and 5.5 per cent, respectively, against Dar es Salaam's 12.1 per cent.

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