Analysts project further drop in inflation

Analysts project further drop in inflation

“If you look at what has happened in the first and second quarters, inflation is likely to fall for eighth straight months because of dropping food prices,” said Tanzania Securities Chief Executive Officer Moremi Marwa in Dar es Salaam over the weekend.

He was reacting to the National Bureau of Statistics (NBS) release on the latest inflation, showing the annual headline inflation rate for July has declined to 15.7 per cent. “The decrease (of headline inflation rate) explains that the general increase of prices for commodities decreased in July, 2012,” said NBS.

Inflation skyrocketed to 19.7 per cent in January but has since been going down. The Consumer Price Index of food and energy were significant factors. “When production costs of those two go down, the situation improves especially with energy where we are seeing today that there is less reliance on the more expensive resources .....rainfall stability also means food prices are on the down side,” said Mr Moremi.

A University of Dar es salaam don, Dr Lenny Kasonga said the inflation rate has been falling in recent months on the back of very tight monetary policies as well as base effects due to comparison with January’s   inflation.

“We should expect a gradual slowdown in inflation,” he said. NBS's statistics however show that the overall index went up to 130.19 in July, this year from 112.51 recorded in July, the previous year. The bureau says food and non alcoholic beverages inflation rate has decreased to 20.8 per cent in July this year from 23.5 per cent recorded last month.

It thus states that excluding food and energy which are the most volatile components in the total Consumer Price Index could provide a more stable inflation rate figure for policy makers.

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