Soma hadithi hii kwa kiswahili
Pemba, Zanzibar, Tanzania:
Poor hit hardest with record inflation
According to the National Bureau of Statistics (NBS), the annual headline inflation rate for July 2022 increased to 4.5 percent from 4.4 percent recorded in June, 2022 – it continues to effect the poorest the hardest
From food items to fuel and transport costs, prices are hitting Tanzanian consumers after inflation reaches a five-year high.
According to the National Bureau of Statistics (NBS), the annual headline inflation rate for July, 2022 increased to 4.5 percent from 4.4 percent recorded in June, 2022.
The July rate is the highest since November 2017 as Covid-19 pandemic and the recent Russia-Ukraine conflict have disrupted the global supply chains.
In real terms this hurts the poorest citizens in the economy the hardest.
For example in Zanzibar Mbeya first grade rice is sold for 3800 shillings per kg while the second grade is sold for 1 kg 3500 shillings, the third grade is sold for 3000 kg while the last grade is sold for 1 kg 2800 shillings.
These prices are in Mwanakwerekwe C markets, Mombasa Market and in many Mjini and Mashamba stores.
The price of soya beans 1 Kg is 3500 shillings, other beans 1 Kg is 3200 shillings.
In terms of the price of sugar, it has also increased and reached 1 Kg, it is between 2400 shillings and 2600 shillings depending on the type of sugar.
“The situation has become difficult, everything is expensive, things are not bought, Mbeya rice is not available,” complained Hamad Faki Jabu, a resident of Darajabovu who was buying products at the Mwanakwerekwe C Market.
If you visit different places in the shops, the price of Mapembe rice has also increased from 1 Kg 1500 shillings to 1 Kg 1800 shillings.
Wheat flour is currently 1 Kg at 2000 shillings. While Boflo bread, the favorite of many Zanzibari people, is sold at 250 shillings from the original price of 200 shillings.
In several restaurants in Unguja and Pemba, the price of chapati has reached 700 shillings.
In terms of cooking oil, half a liter was 1000 shillings, the current price is 2000 shillings
The price of half a plate of dry chips is 2000 shillings of which the previous price was 1500 shillings.
The price of concrete chips has now reached 3000 shillings from 2500 shillings.
The inflation speed has prompted the Monetary Policy Committee (MPC) which last week signaled a monetary policy that is set to reduce liquidity.
“At the backdrop of rising inflationary pressures, the MPC approved the Bank of Tanzania to reduce the speed of expanding liquidity in the remainder of 2022, in order to tame inflationary pressures from the demand side, while safeguarding the growth of the economy,” the committee said in a statement.
“The MPC also reiterated the need for the Bank of Tanzania to maintain adequate foreign exchange reserves, in order to cushion the economy from the negative impact of high commodity prices in the world market,” it added.
Tanzania targets the inflation to remain between three and five percent but the committee said high food, energy and fertilizer prices in the world market pose an upward risk to the future inflation.
What should be done?
Economists have an alternative view of what should be done in the current situation where, they say, the speed of price increase is pushed by factors which are non-monetary in nature.
“If you look at the domestic markets, liquidity is not that loose to become a problem. People in the streets have no enough money and yet commodity prices are going up,” said Dr Abel Kinyondo of the University of Dar es Salaam economics department.
He described the current inflation as “cost push inflation,” calling for fiscal measures to help addressing the situation.
“Monetary policy is a traditional way of controlling inflation but you need to identify its source to take relevant measures. For instance, the current inflation is pushed by cost of commodities and equipment, so monetary alone cannot arrest the situation.”
“You need fiscal measures like reviewing taxes, charges, fees and levies on key items to address the factors which push pressure on the cost increase,” added Dr Kinyondo.
Some of the food items which prices have recently increased include wheat flour. This is due to the fact that Tanzanian manufacturers mostly import the wheat grain from countries such as Russia and Ukraine which exports were disrupted by the war between the two countries.
Executive director of the policy and poverty research think tank Repoa, Dr Donald Mmari described the current inflation as structural in nature, meaning that it’s caused by supply disruptions caused by Covid-19 and the recent Russia-Ukraine war.
“These disruptions have pushed up the demand and so the prices,” said Dr Mmari who is professionally an economist.
He said the shortage of rains in Tanzania during the last season is also increasing food scarcity, hence pushing up the prices.
“Monetary policy is a short-term measure but in the medium term we need to ensure supply of commodities like wheat grain and edible oil are sufficiently produced locally,” he said.
Petrol prices have also been increasing since the start of the Russia-Ukraine war early this year. For instance, petrol price increased from Sh2,480 per litre in February 2022 to Sh3,410 this August, according to the Energy and Water Utilities Regulatory Authority (Ewura).
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