Effects of Inflation in Tanzania

Food prices in Tanzania have doubled in a span of about 12 months. The sad fact is that people’s incomes have not increased in real terms during the same period.  

Despite the runaway food prices, however, officials have been touting the government’s ability to keep the headline inflation in check, currently at 4.8 per cent, as a major achievement.

When he addressed a rally to mark the 46th anniversary in Dar es Salaam on Sunday the Vice President, Dr Philip Mpango, a consummate Economist in his own right, pointed out that Tanzania was doing better in containing inflationary pressure than, say, Uganda or Kenya whose headline inflations now stand at 10.1 per cent and 9.2 per cent respectively.

While it is true that the government deserves credit for maintaining sound macroeconomic fundamentals, we suggest that care needs to be taken by government officials when trying to take credit for low inflation. This is because the unprecedented rise in food prices has left many people struggling to make ends meet and so repeated touting of low inflation can make government officials appear out of touch. Instead, more time should be spent on explaining what the government was doing to bring down food prices and help boost people’s incomes and job creation.