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Inflation in Tanzania Down to 21-Month Low

Inflation in Tanzania Down to 21-Month Low

From Africa Review

The rate at which prices of goods and services increases in Tanzania slowed down to a 21-month low record of 9.8 per cent in March this year, the National Bureau of Statistics (NBS) announced Monday.

Inflation reached double-digit levels in June 2011 when it was recorded at 10.9 per cent from the May 2011 level of 9.7 per cent due to increasing prices of food, fuel and other non-food products.

But Tanzanians may have found solace in the announcement by the NBS director of population census and social statistics, Mr Ephraim Kwesigabo, that inflation was once again in single-digit levels, having dropped further from the February 2013 level of 10.4 per cent due to reduced food prices.

“The decrease is mainly on account of the government’s effort to ensure that food prices are dropping,” he told journalists in Dar es Salaam.

Analysts say a lower inflation rate pushes up the purchasing power of the local currency.

It also helps to bring down the lending interest rates by captains and titans in the financial sector since, hoping that all other factors remain constant, the higher the inflation, the higher the interest a financial institution will charge.

Higher inflation rates also imply huge losses to people with fixed incomes that are not inflation-adjusted as well as lenders with no inflation-adjusted interest rates – a majority of whom are those in the informal money lending markets, according to Dr Honest Ngowi, an economic analyst.

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