David Ibemere

Rise in cost of transportation and food is driving inflation in East Africa

Almost all East African countries recorded an average of 6.0 per cent inflation during the quarter ending this March, mainly driven up by food prices and transport costs.

The region has recorded an increase of 0.5 per cent compared to 5.5 per cent, which was recorded in the previous quarter.
Only Rwanda managed to maintain the inflation at 5.5 per cent in the region. According to the Bank of Tanzania’s quarterly economic bulletin for the quarter ending March this year, with exception of Rwanda, all other East African countries registered increase in inflation. Tanzania’s inflation was driven by prices of food items, particularly for rice, maize grains, maize flour, cooking banana and beans. In Uganda, the inflation rate increased due to a rise in cost of transport, clothing and footwear and food while in Kenya and Burundi the inflation rates increased due to higher food prices. However, according to the bulletin, all EAC Partner States attained convergence criteria level of inflation rates of not more than 8.0 per cent. Moreover, the average inflation rate in the SADC region increased by 1.4 per cent in the quarter ending March, this year.The inflation has increased from 7.9 per cent to 9.3 per cent respectively with an exception of Lesotho, Malawi, Seychelles and Zambia. The remaining SADC member countries registered increase in inflation rates.The BoT bulletin states that decrease in inflation rate in Lesotho and Malawi was largely associated with a fall in food prices, whereas in Seychelles, the fall in inflation was mainly attributed to decrease in prices of communication and cloth wear. In Zambia, inflation rate increased largely on account of a fall in prices of non-food consumer goods and services.

Interestingly, the rise in inflation in South Africa was due to the rise in prices of meat, fish, fuel and electricity; while the increase in inflation in Botswana, was largely attributed to a rise in prices of food and non-alcoholic beverages, tobacco, furnishing and household equipment.

The increase in inflation rate in Mozambique was mainly due to a rise in prices of housing and utilities, alcoholic beverages, furniture and equipment, transport, education, footwear and clothing.

Only Zimbabwe, Seychelles, Mozambique, Mauritius, Malawi and Angola did not manage to achieve the SADC agreed convergence criteria level of inflation rate between 3.0 and 7.0 per cent.