The observation is made in a report on current economic trends in
the Isles, where it is stated that while the current rate of inflation
on Tanzania Mainland stands at around 6.5 per cent, inflation in
Zanzibar has now scaled up to double-digit inflation.
It is a worrying sign for an economy because of it has adverse
effect on Isles living standards and economic performance, says the
current Monthly Economic Review (MER) issued by the Bank of Tanzania
(BoT). It indicates that Isles headline inflation rose to 10.9 percent
in the year ending November 2015 from 8.7 percent in October 2014.
This increase (by 25.3 percent) according to the report is mostly
driven by food prices, while on a month-to-month basis, headline
inflation also rose by 2.2 percent in November 2015 from negative 0.4
percent a month earlier.
Traditionally high inflation is considered to be damaging to an
economy, as it creates uncertainty and can wipe away the value of
savings. Economists advise governments to target an inflation rate of
two percent, suggesting that low inflation has unquestioned advantages
to an economy.
Then again, the BoT’s review indicates that Isles food inflation
increased to 15.8 percent in November from 11.7 percent in the year
ending October 2015. It has been noted that the increase was to a large
extent accounted for by rising prices of rice, fish, sugar, banana and
wheat flour.
Prices of consumer goods with large weights recorded significant
increases in prices during the year. On a month-to-month basis food
inflation rose by 3.9 percent in November 2015 compared to a negative
1.0 percent (deflation) in October 2015, with the increase explained in
the same way.
Non-food inflation edged up to 5.5 percent in the year ending
November 2015 from 5.2 percent in the year ending October 2015, mainly
due to increase in prices of cement.
Inflation of consumer goods and services excluding food and energy
proxy for core inflation stood at 12.9 percent in the year ending
November 2015 from 9.9 percent in the year ending October 2015.
On a month-to-month basis, core inflation picked up by 2.5 percent
in October 2015 from negative 0.6 percent in October 2015. Annual
inflation for energy and fuels was negative 8.2 percent in November 2015
similar to the preceding month.
With everything going up, Mustafa Juma Duni, a petty trader at
Darajani Market told this reporter despite not being an expert, to be
hones; inflation hurts a lot. It cuts the power to purchase; one has to
pay more for the same goods or services.”
The trouble is that while the buyer needs more money no increment
in salary or other incomes up at the same time. “It is unfortunate
because while prices for many goods are rising, or remain steady in some
cases, the packaging frequently is smaller. The problem is that with
the new look of packaging some units have been taken away, so you are
not buying the same unit in actual fact as you have been used to.”
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