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Inflation drops slightly to 10.4 pc in February

It said that the year-on-year inflation rate eased to 10.4 per cent from 10.9 per cent recorded in January and has now fallen in 12 of the last 13 months. In December 2012 it was unchanged. On the month, consumer prices rose 1.4 per cent in February compared to a 1.3 per cent increase in January.

The Bank of Tanzania (BoT) had earlier forecast that headline inflation will fall to single digits by the end of the financial year (June 2013). BoT has been intervening in the currency market to fight depreciation of the Tanzanian shilling, which, if sustained, could pose upside inflationary risks.

“The decrease of the annual headline inflation rate for the month of February 2013 explains that the speed of price increase for commodities in February 2013 has decreased compared to the speed recorded in January 2013,” the National Bureau of Statistics said in a statement.

Prices of food and non-alcoholic beverages rose 12.0 per cent year-on-year in February 2013 after an 11.9 per cent increase in January 2013. The annual inflation rate for energy increased to 18.3 per cent in February from 17.4 per cent in January.

NBS’ Director of Population Census and Social Statistics, Mr Ephraim Kwesigabo told the ‘Daily News’ that the CPI normally goes up but when computed to find headline inflation the rate decreases. “It’s rare for the general prices in the economy to go down,” Mr Kwesigabo said.

“If that happens then it’s deflation. It’s very bad for the economy.” The statistician said he doesn’t recall when the country registered a deflation but had happened in the past in other economies like Japan. Economists have it that, goods’ price increment acts as a catalyst for manufacturers to produce more since it increases the rate of revenues generated in that particular period.

Food items that contributed to such increase include rice by (6.2 per cent), maize grains (7.8), maize flour (7.8), beef (1.5), fresh fish (3.0), beans (1.3) and sweet potatoes (5.6). While non-food items that contributed to the increase of the rate include garments for men (1.1), garments for women (1.3), charcoal (7.4), salaries for domestic servants (2.5) and accommodation services (3.8).

The University of Dar es Salaam Senior Economic Lecturer, Dr Haji Semboja, said “it’s normal for CPI and inflation to go into opposite direction, as inflation measures percentage changes of price over a certain period.” However, the outspoken economist hit back that the rate of declining was not encouraging.

Another Economist with Mzumbe University’s Dar es Salaam School of Business, Dr Honest Ngowi, said the problem slow declining pace of inflation was due to failure of the authorities to address the real root-cause. “Still I say, the problem of our inflation is structural not monetary.

“And it will take time to reach the acceptable rate of around 5 per centÉ on average every month it climbed down by less than 1 per cent,” Dr Ngowi said. The International Monetary Fund (IMF) said the country inflation is projected to reach 7 per cent at the end of this year. The fund was also concerned about the snail pace of curbing the rate.

THE African Development Bank has invested 50 million ...

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Author: DAILY NEWS Reporters

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