Inflation decreases as food stocks increase in Tanzania


Tanzanian government’s efforts to boost  its economy have shown slight improvement over the past 22 months.

According to statistics, whereas inflation has remained significantly below the medium target of 5.0 per cent and lower than the respective convergence criteria for EAC and SADC of maximum 8.0 per cent and 3 to 7 per cent over the past good six years, Bank of Tanzania (BoT), monthly economic review report reveals.

With the Gross Domestic Product (GDP) at 6.6 per cent, inflation in Tanzania has been taking a rather decent fall over the past month, whereby according to the report, in August the annual headline inflation was at 3.6 per cent compared to 3.7 per cent in the previous month.

According to the report, headline, food, non-food and core annual inflation rates have been decreasing since 2016, while food inflation peaked higher from November 2016 to November 2017, then taking a fall from 2018 to present.

Additionally, the report reveals that on a month-to-month basis, the headline inflation hit negative 0.5 per cent in August 2019, compared to negative 0.4 per cent in corresponding month in 2018. However, despite the food shortage signs in northern part of Tanzania, headline inflation is projected to stay below the medium-term target throughout 2019/2020.

The report argues that, in addition to the latter, envisioned stability of the exchange rate, prudent monetary and fiscal policies and moderate global prices will drive the headline inflation stable over the remaining period, despite the circumstances at hand.

Food Inflation

Tanzania agriculture  has proven to be an important pillar of the economy with almost 29 per cent contribution to the GDP, and per report, the industry has seen, food inflation to maintain a significant fall, albeit slowly picking up in recent months.

Further, per the report, in August 2019, twelve-month food inflation increased to 3.7 per cent from 2.9 per cent in the preceding month. Moreover, on month-to-month basis, food inflation scored negative 1.1 per cent in August 2019, compared to 2018 corresponding month at negative 1.9 per cent.

And yet, annual non-food inflation has decreased to 3.5 per cent in August 2019 from 4.2 per cent in July 2019. This was considerably driven by moderation in prices of petroleum products- which influence production and supply of resources over space and time in Tanzania.

The annual inflation for energy and fuels decreased to 6.3 per cent from 9.3 per cent, but—inflation of all items excluding food and energy, which is a proxy core of inflation, eased to 2.9 per cent in August 2019 from 3.1 per cent in the previous month.

READ: Slower rises in food prices depreciates Tanzania’s inflation by 0.2 per cent in July

Food Stock

On the other side of the mark, the trend of food supply has remained significantly stable, whereby the 2018/2019 food crop season has catapulted to 16.4 million tons, which above the national target of 13.8 million tons.

The respective situation is predicted to remain within the remaining period of 2019/2020, due to decent food production in most of food baskets spheres across Tanzania.

However, per report: maize stocks (which is one of the staple crops in Tanzania) held by the National Food Reserve Agency (NFRA), remained higher at around 68,407 tons at the end of August 2019, from 67,410 in the previous month.

The meanwhile, the report commented that NFRA sold 156.3 tons of maize to the World Food Program and Prisons department, and purchased 1,153.1 tons from various sources in the country.

Additionally, per the report: wholesale prices of all major food crops were higher in August 2019 than in the corresponding month of 2018. On a monthly basis, prices of all major food crops rose, except for finger millet, rice.

Unequivocally, the report argues that: in terms of 12-month change of wholesale prices of food crops, the price of maize has been increasing since May 2018.

The uniform increase in prices of maize was attributed to the growing demand from the domestic market, accompanied by production shortfall experienced in some of the farming regions in Tanzania and neighboring nations.

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Padili Mikomangwa is an environmentalist based in Tanzania. . He is passionate about helping communities be aware of critical issues cutting across, environmental economics and natural resources management. He holds a bachelors degree in Geography and Environmental Studies from University of Dar es Salaam, Tanzania.

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