2008-08-02 09:47:38
By Theo Mushi
The inflation rate now stands at 9.7 percent up from 9.4 percent last month and nearly double what it was in 2006 at 5.7 per cent.
The food inflation is above 11 per cent and in the near future it will rise even further.
In 1995, headline inflation was above 30 percent and a combination of tight monetary policy and fiscal discipline brought down the inflation rate to 4.5 per cent in 2004.
With stable exchange rates, low and stable prices, it made business planning predictable and hence the improvement of the investment climate.
A better investment climate and a combination of business friendly bureaucracy, better physical infrastructure and investment promotion were expected to increase local and foreign investment.
[Source: GUARDIAN]
Monday, August 4, 2008
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1 comment:
Very interesting story, over the weekend i have few friends came over to visit. One of the friend just got the job in Mortgage company in Tanzania. I asked about how they're going to offer Fixed Rate Mortgage with 10% interest while inflation is hike up to double digit?
I believe the main source of this inflation is because of the surge of oil price in the world market. Also, the invasion of biofuel has caused many farmers to shift from food products to biofuel products. That has caused scarce on world food.
The inflation skyrocket has effect on everything. On the investment side it reduce future investment because many investor avoiding borrow money at higher rates.
It also hurts investors who leand their money at certain rates. For instance people who own T-Bond and T-note from BoT which has 8yrs to maturity. This people will received coupon payments which doesn't hedge the inflation risk and also their face value is on risk. Since the market is unliquid then their investement is in limbo because they can't even cash the check and get the face value. I call it STUCK IN THE MIDDLE.
Mdau # 1
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