Tanzania full-year 2011 inflation surges by 7.2 pct

BY AGENCIES

TANZANIAI’S inflationary rate for 2011 jumped to 12.7 percent from 5.5 percent in 2010 on the back of higher food prices, according to latest statistics by the National Bureau of Standards released today.

The inflation rate was way above the government's target for the fiscal year ended June 2011 of not more than 5 percent.

NBS a few days ago noted that Tanzania's annual inflation rate rose for the 14th consecutive month in December, to 19.8 percent from 19.2 percent in November, but the government said it hopes to bring it down to single digits by June.

"The central bank has been taking some measures to fight inflation and we've already seen rates starting to go down and money supply has been tightened," Ephraim Kwesigabo, director of population census and social statistics said.

The central Bank of Tanzania (BOT) raised the bank reserve ratio in October to 30 percent from 20 percent in an effort to mop up excess liquidity.

Kwesigabo warned that a recent rise in energy prices could add inflationary pressures in east Africa's second-biggest economy.

"We are very much worried about the impact of higher electricity tariffs on the inflation rate. But if upcoming rains are not destructive and we get a good harvest, we are confident that the inflation rate will start to stabilise," he said.

Tanzania's state-run electricity firm hiked electricity prices by 40 percent from January 15, with the country's energy regulator expected to review prices again after six months.

The country's economic growth slowed to 6.4 percent in the third quarter of 2011 year-on-year from 6.7 percent growth in the second quarter.