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Inflation to rise sharply in Tanzania due to fall in crop production
Tanzania forecasts low food production — far from previous projection — following crop destruction by heavy rains in 18 regions early this year.
The drop in food production could have a negative impact on inflation rate.
It could affect the government’s effort to lower it to single-digit levels in the next fiscal year.
Tanzania was in the 2008/2009 season expected to harvest 11.5 million metric tonnes of maize which would be an increase by 600,000 tonnes, from 10.9 tonnes in 2008/09 fiscal year.
But late rains have diminished all hopes of reaching the target.
Most of the regions in the country have also been experiencing floods.
These have caused crops in Morogoro and Dodoma peasant and commercial farms to be wiped out.
The Director of Food Security in the Ministry for Agriculture and Food Security, John Mgodo, said in Dar es Salaam last week that it is too early to issue forecasts but that the matter is being monitored.
But given the situation on the ground, with most of the major regions affected, a high number of people displaced and cut-off road communication, the production might go down by over 20 per cent.
Food prices are the major component which influences the calculation of the inflation rate to determine its down or upward trend.
Bank of Tanzania Governor Benno Ndulu said food is the main culprit that increases the rate of inflation, accounting for over 8.0 per cent out of 12.2 per cent of last December’s rate.
Prof Ndulu said that increasing food production” is the only way to arrest the double-digit inflation figure, which is on the rise.
To do away with food prices’ dominance when calculating inflation the National Bureau Statistics (NBS) is set to revised its way of calculating the rate from arithmetic to geometric.
That way, the weight average will be the change on base prices, the basket of goods and services, and weights in general.
The Director of Policy and Research Confederation of Tanzania Industries, Hussein Kamote, told The EastAfrican that by using the geometric system, the inflation figure will decline.”
