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Working Paper 163 - Food Prices and Inflation in Tanzania
In recent years, high and volatile inflation has re-emerged as a central macroeconomic policy concern in Tanzania, as it has across East Africa. Throughout the first decade following the macroeconomic reforms implemented in the mid-1990s, strong domestic output growth coupled with favourable global economic conditions helped keep headline inflation close to the authorities’ indicative target of 5 percent per annum2 . But since the onset of the global financial crisis the economy has been buffeted by much greater volatility, both domestic and internal which has, in turn, been reflected in significantly higher and more volatile inflation. In mid-2008, year-on-year headline inflation edged above 10 percent per annum for the first time since the early 1990s, and while it dropped back to low single digits in 2009 it rose again sharply towards the end of 2010, reaching close to 20 percent per annum in the final quarter of 2011.