Source African News

Inflation in most East African countries is said to be rising this year. In Ethiopia it moved from 33.6 % in August to37.2 % in September; In Kenya from 27.6% in August 2008 to 28.2% in September 2008 and In Tanzania a 10-year high point of 11.6 percent in September.

Inflation in Ethiopia for the month of September 2008 rises to 37.2 % from 33.6 % in August and from 27.6% in August to 28.2% in September in Kenya, while annual inflation in Tanzania surged to a 10-year high point of 11.6 percent in September owing to soaring food prices, official data from the National Bureau of Statistics show.

Inflation on food items in Ethiopia for the month of September 2008 has also reached 51.8 % from 46.9% in August. After the Ethiopian government TPLF announced lifting subsidy on fuel and shifted to importing wheat, many people including the opposition parties expressing their fear that the current inflation in the country will get worse.

According to critics, it is better for the government Woyanne to continue subsidizing at least kerosene along with importing wheat and selling it with cheaper prices for the low income groups, which represents the majority of the around 80 million population of Ethiopia.

The Kenya National Bureau of Statistics (KNBS) indicated that the overall year on year inflation rate increased from 27.6% in August 2008 to 28.2% in September 2008. Underlying inflation, excluding food prices, rose more modestly from 13.1% to 13.3%.

On a monthly basis, food items (2%), housing costs (2%) and medical goods and services (1.4%) showed the strongest price increases. Year on year, food and non-alcoholic drinks (37.2%), fuel and power (31.6%), transport and communications (19.1%), alcohol and tobacco (15.6%) and medical goods and services (14%) had the largest price increases.

In August this year, the inflation rate in Tanzania was 9.8 percent. The recent surge indicates a 1.8-point increase within a month. In February this year, inflation was 8.9 percent.

Analysts say the government would not be able to bring down the inflation rate to seven percent by the end of the current financial year.

Dr Honest Ngowi of the Mzumbe University, said: “The seven percent goal is now unrealistic since, under the current system, Tanzania has nothing in place to control food and fuel prices, the two most dominant factors in the country’s inflation basket,” according to the citizen newspaper in Tanzania.

He said since the inflationary spiral was mainly on food, fuel and other production factors, it would be very difficult for the country to control it in the short-term.
“It could be easily contained if it was caused by excess money supply on the market. However, this is due to production factors,” he said.

He said this could worsen considering that the holiday season was just around the corner.
“Inflation will now be fluctuating between 10 and 12 percent. It requires magic for the government to bring it back to seven per cent,” said Dr Semboja Haji, of the University of Dar es Salaam’s Economic Research Bureau (ERB).

He criticized the government for having no mechanism in place to protect the country from the negative effects of economic developments outside.