East African Business Week

DAR  ES SALAAM, TANZANIA - Tanzania has said it may fail to contain the 2010/11 inflation rate below 5 % following the re-emergence of inflationary pressures fueled by the cost of electricity and food.
 The Bank of Tanzania (BoT) said in June's Monetary Policy Statement (MPS) release recently, that average annual inflation declined to 6.3 % during the first 10 months of 2010/11, from 11.1 % recorded in the corresponding period in the preceding year.
 Nevertheless, BoT said in the report, "The re-emergence of inflationary pressures from the recent increase in domestic food prices and global oil prices poses a challenge to the attainment (the) inflation target."
 The inflationary pressures were exacerbated by an increase in electricity tariffs by 18 % starting January, as well as increase in prices of domestically produced food items, following poor short rains in the second quarter of 2010/11.
 In line with these developments, inflation rose continuously, reaching 8.6% and 9.7 %s at the end of April and May respectively, while statisticians extend worries that the rate will cross to double digit.
 When presenting the April's inflation figure, NBS's Director of Population Census and Social Statistics, Mr Ephraim Kwesigabo, said the rate though, in single digit is "worrisome."
 In particular, the central bank said, annual inflation eased from 7.2 % in June 2010 to 4.2 % in last October.
However, beginning November 2010 inflation tended upwards mainly due to increase in global oil prices.
 The problem lies on the annual inflation rate of the food and non-alcoholic beverages group (combining food consumed at home and in restaurants) which was on an upward trend since last November, reaching 9.7 % this April from 6.0 %.
Likewise, the annual non-food inflation rate maintained an upward trend since November 2010 picking up to 7.8 % in April 2011, from 4.9 %.
 While on the other hand, the annual inflation rate excluding food and energy-a proxy for core inflation-took a much slower upward trend reaching 5.7 % in April from 3.7 % in November 2010, signifying the pass through effect, particularly from high oil prices.
East African economies, apart from Burundi, have been hit by high inflation rates triggering a high cost of living.
The shilling in Kenya, Uganda and Tanzania and the Rwandan Franc have all lost considerable ground to the dollar in the past five weeks. The situation has not been helped by the rise in fuel costs.
In Uganda politicians staged demonstrations in April and this was followed by a two-day trader’s strike that paralysed business in Kampala, prompting the government to suspend trading licences..
This week taxi drivers threatened to stage a strike protesting the high fuel costs.