Dar inflation goes five-year high, still lowest in EAC

THE country’s monthly inflation has climbed up to a five-year high but remains the lowest in the East African region.

The inflation increased to 4.8 per cent last month compared to 4.6 per cent of August, while Kenya reached 9.2 per cent and Uganda clocked 10.0 per cent. The EAC benchmark is 5.0 per cent.

National Bureau of Statistics (NBS) said the increase of headline inflation showed that the speed of price change for commodities was high last month compared to the previous month.

“The increase of the overall index is attributed to the price increase for some food items and non-food items,” NBS statement said yesterday.

The index was pushed up mainly by the food and non-alcoholic beverages inflation rate for last month increased to 8.3 per cent from 7.8 per cent recorded in August and transport rose by 7.9 per cent.

An economist-cum-investment banker, Dr Hildebrand Shayo, said the inflation was caused by more than one driver hence the difference seen in inflation was negligible.

“The bottom line is that it is tricky to control imported influenced inflation using measures that don’t have a high impact on effective demand,” Dr Shayo told ‘Daily News’ on Monday.

The government started to subsidise fuel pump prices in June and in the last two months, the prices dropped after oil at global markets went down.

Alpha Capital Head of Research and Financial Analytics, Imani Muhingo, said the drop in fuel prices most definitely had a positive impact, as the energy and fuel index dropped from 9.6 per cent in August to 7.9 per cent in September.

“What held inflation in September is food and non-alcoholic beverages which has the largest weight (28.2 per cent) in the consumer basket,” Mr Muhingo said .

The rising food inflation originates from several reasons including the war in Ukraine, where the conflicted area produces about 30 per cent of the global grain supply.

The shortage of rainfall was also blamed for food shortage in the country. Last month weatherman warned of a shortage of rainfall in the country for the last quarter of the year.

“The same has been seen for a better part of the last few months leading to a shortage of electricity and water supply,” Mr Muhingo said.

However, pundits had it that the pump prices could be worse without the government subsidies and significant would start to be seen if the prices continue to drop in the next four to six months.

The preliminary budget statement of Saudi Arabia, the global largest oil exporter, stated expectations of a 20 per cent decline in oil prices next year, which has prompted production cuts by OPEC+.

Core inflation, which excludes items with volatile prices that as unprocessed food, energy and utilities, has slightly increased to 3.3per cent from 3.2per cent recorded in August.

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