BoT to change method of determining inflation

[TandaleOne]

13th September 2010





The Bank of Tanzania (BoT) is in a process of changing the approach used in calculating inflation, whereby food will not be the main economic determinant as is presently the case.
Speaking on Friday in an exclusive interview with The Guardian the Bank’s director of Economic Research and Policy Dr Joe Masawe said his office was now in the process of changing the economic determinants of inflation.
He said a number of countries had adopted a new system of determining inflation whereby food items were given more priority than other economic goods.
“Since business has been expanding there are many products or items which can be given priority instead food,” said Dr Masawe.
He said with the new methodology, the price of food would not change drastically because of inflation.
Dr Masawe said the countries which had adopted the new system had improved economically than those which had remained with the old one.
He said generally the prices of food had remained stagnant, meaning that there was no food inflation, although by this time before the new methodology is introduced, food was the main determinant.
“Oil is among the products whose price has always been going up. But with the price of food remaining stagnant, but there is inflation in oil price, it would be wrong to given preponderance to food items as main determinants,” he said.
He said in the first quarter of the 2010/11 budget, the economy rose by 7 per cent contrary to the past.
Dr Masawe said in the first quarter of the 2009/2010 budget, the economy rose by 5.4 per cent, while during the same period in 2008/2009 it had risen by 6.2 per cent.
“All those indicators show that the national economy is improving, and until this time, the trend is going on well and reflects that the economy will continue to improve in the future,” said Dr Masawe.
He said the BoT had enough foreign reserves capable of making import purchases for five to seven months.
“We have a stock of USD3.7bn which can save for five months and if we include the money owned by private banks, we may have the capability of importing goods for seven months,” he said.
He said the inflation rate had remained 6.3 per cent, while tradition products had secured goods markets abroad, a clear assurance that the economy would continue to improve.
Dr Masawe said the money circulation was balanced, and it was not likely to be affected by the general election.
“We are not expecting to have excess money in the market, because everything has been calculated and economically budgeted,” concluded Dr Masawe.

Source:The Guardian

 

[Jibaba Bonge]

TandaleOne, This is the forum that you deserve to be. the odd thing is your signature.

 

[TandaleOne]

TandaleOne, This is the forum that you deserve to be. the odd thing is your signature.

I think that has something to do with what I strongly believe in.More in what unites us.

 

[Kabengwe]

BoT is playing blind! This is just an escape goat...

Wanajua inflation iko juu kuliko figures wanazotoa, Vyakula vimepanda bei by almost 100% iweje inflation rate iwe chini kiasi hicho kama wanatumia vyakula ku-calculate inflation rate?

Hivyo vyakula wanavyotumia kucalculate inflatio ni vipi hasa. I strongly belive walitakiwa kutumia mahindi na maharage ambavyo vyote vimepanda bei by almost 100% ukilinganisha 2005 na 2010.

Wakitumia oil prices suala litakuwa lile tu! Hizo figures wanacook for political reasons.
Na wafanyakazi ndo wanakuwa victims wa hizo cooked figures coz mishahara yao haiwezi kuongezwa sana based on "inflation figures" from BoT. Kama wangekuwa wanatoa figures za kweli, kima cha chini kingekuwa 315,000/= kama Mgaya alivyokuwa anapigania.

 

[PatPending]

BoT is playing blind! This is just an escape goat...

Wanajua inflation iko juu kuliko figures wanazotoa, Vyakula vimepanda bei by almost 100% iweje inflation rate iwe chini kiasi hicho kama wanatumia vyakula ku-calculate inflation rate?

Hivyo vyakula wanavyotumia kucalculate inflatio ni vipi hasa. I strongly belive walitakiwa kutumia mahindi na maharage ambavyo vyote vimepanda bei by almost 100% ukilinganisha 2005 na 2010.

Wakitumia oil prices suala litakuwa lile tu! Hizo figures wanacook for political reasons.
Na wafanyakazi ndo wanakuwa victims wa hizo cooked figures coz mishahara yao haiwezi kuongezwa sana based on "inflation figures" from BoT. Kama wangekuwa wanatoa figures za kweli, kima cha chini kingekuwa 315,000/= kama Mgaya alivyokuwa anapigania.

wewe kuna uchaguzi mwaka huu

 

[Mvaa Tai]

Hapo naunga mkono bot, kwasababu huwezi kutumia chakura kukokotoa mfumuko wa bei huku ukijua fika chakula hakimgusi kila mtu hata yule mwananchi wa chini kabisa. Ila wakitumia vitu kama mafuta, na bei za simu watakuwa sahihi maana hivi vinamgusa kila mtu hata yule wa chini kabisa

 

[MAMA POROJO]

Hapo naunga mkono bot, kwasababu huwezi kutumia chakura kukokotoa mfumuko wa bei huku ukijua fika chakula hakimgusi kila mtu hata yule mwananchi wa chini kabisa. Ila wakitumia vitu kama mafuta, na bei za simu watakuwa sahihi maana hivi vinamgusa kila mtu hata yule wa chini kabisa

???????????

 

[TandaleOne]

wewe kuna uchaguzi mwaka huu

So..?

 

[bnhai]

Hapo naunga mkono bot, kwasababu huwezi kutumia chakura kukokotoa mfumuko wa bei huku ukijua fika chakula hakimgusi kila mtu hata yule mwananchi wa chini kabisa. Ila wakitumia vitu kama mafuta, na bei za simu watakuwa sahihi maana hivi vinamgusa kila mtu hata yule wa chini kabisa

Ezan tell me yr kidding, right? Maana sidhani kama post yako ipo sahihi jinsi ulivyoandika kinyumenyume. Hawa BOT wanataka kudanganya watu. Hoja ya kwamba nchi nyingi wamebadili namna ya kutafuta inflation haiwezi kuwa sababu ya sisi kubali. Tuangalie kiukweli nini hasa ni determinant ya inflation kwa nchini kwetu.
Pia kusema bei ya vyakula haijaongezeka huu ni uongo wa hali ya juu. Kila mtu sasa hivi ni shahidi jinsi kipato chake kinavyoishia kwenye chakula. Ukweli katika hali ya nchi yetu chakula kinachukua sehem kubwa saana ya inflation basket maana hatuna viwanda vingi vinavyotumia diesel au petrol. Ingawa chakula na mafuta they are somewhat correleted. The appropriate measure ya hapo ni ile ambayo ingeweza kuaddress tatizo la correlation katika vitu hivi.
Lakini pia kuna haja ya kuzungumzia tatizo la kuendelea kuporomoka kwa thamani ya pesa yetu

 

[Mdondoaji]

Ezan tell me yr kidding, right? Maana sidhani kama post yako ipo sahihi jinsi ulivyoandika kinyumenyume. Hawa BOT wanataka kudanganya watu. Hoja ya kwamba nchi nyingi wamebadili namna ya kutafuta inflation haiwezi kuwa sababu ya sisi kubali. Tuangalie kiukweli nini hasa ni determinant ya inflation kwa nchini kwetu.
Pia kusema bei ya vyakula haijaongezeka huu ni uongo wa hali ya juu. Kila mtu sasa hivi ni shahidi jinsi kipato chake kinavyoishia kwenye chakula. Ukweli katika hali ya nchi yetu chakula kinachukua sehem kubwa saana ya inflation basket maana hatuna viwanda vingi vinavyotumia diesel au petrol. Ingawa chakula na mafuta they are somewhat correleted. The appropriate measure ya hapo ni ile ambayo ingeweza kuaddress tatizo la correlation katika vitu hivi.
Lakini pia kuna haja ya kuzungumzia tatizo la kuendelea kuporomoka kwa thamani ya pesa yetu

Asante bnhai,

Watakuja kudai kuwa kutumia mafuta itawasaidia kwakuwa eti mafuta spillover effect yake iko katika mpaka bei ya chakula but kuna kitu hapa cha kuogopesha why now wanabadilisha inflation? Kwanza kama ulivyosema hatuna viwanda hivyo vya kudai vinatumia mafuta hivyo basi mchango wa mafuta katika uchumi ni somehow not as substantial kama tungelichukua food kama food as a determinant. Likewise, ukulima we ni petty agriculture yaani wanalima kwa kujitosheleza mahitaji yao na kidogo kuuza hatuna ile large scale farming kuweza kusema somehow mafuta yanaweza kuwa yamechangia katika uzalishaji.

This is just an excuse of manipulating figures to lower the level of inflation in the country. Wanajua kuwa gharama za maisha na inflation haziwiani kabisa hivyo basi ili kupunguza pressure is to adjust the econometric model ili kutekeleza malengo ya serikali. Pia wakifanya manipulation hayo yanasaidia pia katika kupunguza pressure katika madai ya mshahara kwa wananchi, value of currency ili tuendelee kuishi kwa mshahara kiduchu.

Perhaps wangelitueleza wanajitahidi vp kuikoa shillingi, na je kama wanataka kubadilisha determinants watuambie inareflect vp hali halisi ya maisha au ndio kuonyesha tu inflation ndogo na uchumi unakua kwa figures za kupikwa!!!!

 

[TandaleOne]

Tupe hiyo analysis mzee tunakusubiri

The basic question is why does BoT what to abandon food as the main determinant in inflation analysis????Though kuna a type of coincidence hapa kwamba we have an election and the inflation figures haven't been good tuwe open minded kujua kama tukiweka siasa pembeni ni kwa nini bei za vyakula pekee si vizuri kitumika kama main determinant ya inflation.Kwa wachumi,iko tofauti kati ya real na headline inflation.Zipo bidhaa ngapi Tanzania ambazo leo zinaamua mustakabali wa thamani ya shilingi??Tatizo hapa ushabiki ndo umetujaa.Vichwa maji wengi

 

[Mdondoaji]

The basic question is why does BoT what to abandon food as the main determinant in inflation analysis????Though kuna a type of coincidence hapa kwamba we have an election and the inflation figures haven't been good tuwe open minded kujua kama tukiweka siasa pembeni ni kwa nini bei za vyakula pekee si vizuri kitumika kama main determinant ya inflation.Kwa wachumi,iko tofauti kati ya real na headline inflation.Zipo bidhaa ngapi Tanzania ambazo leo zinaamua mustakabali wa thamani ya shilingi??Tatizo hapa ushabiki ndo umetujaa.Vichwa maji wengi

Okay but sijaona sababu ya kuweka pembeni food unachokisema hapa ni forms of inflation. Yet unaanza kuzungumzia forms of inflation wakati BOT haijasema wanabadilisha inflation gani? Whatever the case food cannot be eradicated yet alone removed from inflation model since it is among the determinants of inflation tupe ufafanuzi zaidi mzee hakuna kichwa maji hapa!!!

 

[Kang]

Hapo naunga mkono bot, kwasababu huwezi kutumia chakura kukokotoa mfumuko wa bei huku ukijua fika chakula hakimgusi kila mtu hata yule mwananchi wa chini kabisa. Ila wakitumia vitu kama mafuta, na bei za simu watakuwa sahihi maana hivi vinamgusa kila mtu hata yule wa chini kabisa

Mkuu uko sarcastic au? Mtu yupi huyo asiyeguswa na bei ya chakula? Wananchi wa chini kabisa hawali lakini wana simu?

 

[TandaleOne]

Okay but sijaona sababu ya kuweka pembeni food unachokisema hapa ni forms of inflation. Yet unaanza kuzungumzia forms of inflation wakati BOT haijasema wanabadilisha inflation gani? Whatever the case food cannot be eradicated yet alone removed from inflation model since it is among the determinants of inflation tupe ufafanuzi zaidi mzee hakuna kichwa maji hapa!!!

Did they say food will be completely ommited as a determinant???

 

[Mdondoaji]

Did they say food will be completely ommited as a determinant???

No they didnot but whatever the case food plays a major role in determining the inflation of the country. Sasa tufafanulie wewe vp na kitu gani kinaweza kuiondoa food kama major determinant ya inflation Tanzania?

 

[PatPending]

There are several things that don't quite add up in this report

13th September 2010

The Bank of Tanzania (BoT) is in a process of changing the approach used in calculating inflation, whereby food will not be the main economic determinant as is presently the case.
Speaking on Friday in an exclusive interview with The Guardian the Bank's director of Economic Research and Policy Dr Joe Masawe said his office was now in the process of changing the economic determinants of inflation.
He said a number of countries had adopted a new system of determining inflation whereby food items were given more priority than other economic goods.

One can only assume that this is a typo for it contradicts the overall message of this press release. If the "new system" gives more priority to food items over other goods then surely the weight apportioned to food would be higher than that of other goods (this and the fact that the majority of disposable income will be spent on food).

"Since business has been expanding there are many products or items which can be given priority instead food," said Dr Masawe.
He said with the new methodology, the price of food would not change drastically because of inflation.
Dr Masawe said the countries which had adopted the new system had improved economically than those which had remained with the old one.

That's a very general statement and frankly I doubt that it came from BoT's director of research for he knows better.

He said generally the prices of food had remained stagnant, meaning that there was no food inflation, although by this time before the new methodology is introduced, food was the main determinant.
"Oil is among the products whose price has always been going up. But with the price of food remaining stagnant, but there is inflation in oil price, it would be wrong to given preponderance to food items as main determinants," he said.

Deary deary me, this doesn't make sense with regards to how the weights are allocated. Whilst it's true that oil plays a major part in the expenditures accrued by businesses, in the consumer world food is still the dominant force.

He said in the first quarter of the 2010/11 budget, the economy rose by 7 per cent contrary to the past.
Dr Masawe said in the first quarter of the 2009/2010 budget, the economy rose by 5.4 per cent, while during the same period in 2008/2009 it had risen by 6.2 per cent.
"All those indicators show that the national economy is improving, and until this time, the trend is going on well and reflects that the economy will continue to improve in the future," said Dr Masawe.

Again nominal growth, heavily influenced by the prevailing prices which are high by the way. They need to stop taking people for a ride and provide us with deflated figures so that their statistics can reflect a shade of reality.

He said the BoT had enough foreign reserves capable of making import purchases for five to seven months.
"We have a stock of USD3.7bn which can save for five months and if we include the money owned by private banks, we may have the capability of importing goods for seven months," he said.

This is good news, adds to our credit rating/worthiness, very few countries have a better savings stock


My take:
There have been rumours for sometimes now regarding the down rating of food contribution's to the consumer price index and it is also rumoured that this has already happened behind closed doors in spite the NBS maintaining that the weight is still in the mid fifties, hence the sudden drop in inflation which in no way reflects what people see on the streets.

Frankly there is nothing new here, the NBS still produces inflation figures with and without the food component and at times food inflation and this always outgrows the non food one.

Dr. Massawe could be alluding to the creation of a producers' price index which would focus heavily on the prices of inputs and hence give extra weight oil. This is a fairly common index in industrialized countries and is usually published regularly alongside the CPI or RPI or both.

 

[Mdondoaji]

There are several things that don't quite add in this report



One can only assume that this is a typo for it contradicts the overall message of this press release. If the "new system" gives more priority to food items over other goods then surely the weight apportioned to food would be higher than that of other goods (this and the fact that the majority of disposable income will be spent on food).


That's a very general statement and frankly I doubt it that it came from BoT's director of research for he knows better.



Deary deary me, this doesn't make sense with regards to how the weights are allocated. Whilst its true that oil plays a major part in the expenditures accrued by businesses in the consumer world food is still the dominant force.



Again nominal growth, heavily influenced by the prevailing prices which are high by the way. They need to stop taking people for a ride and provide us with deflated figures so that their statistics can reflect a shade of reality.



This is good news, adds to our credit rating/worthiness, very few countries have a better savings stock


My take:
There have rumours for sometimes now regarding the down rating of food contribution's to the consumer price index and it is also rumoured that this has already happened behind closed doors in spite the NBS maintaining that the weight is still in the mid fifties, hence the sudden drop in inflation which in no way reflects what people see on the streets.

Frankly there is nothing new here, the NBS still produces inflation figures with and without the food component and at times food inflation and this always outgrows the non food one.

Dr. Massawe could be alluding to the creation of a producers' price index which would focus heavily on the prices of inputs and hence give extra weight oil. This is a fairly common index in industrialized countries and is usually published regularly alongside the CPI or RPI or both.

Mkuu thanks na infact Real inflation incorporate both food and hicho wanachokidai energy but the fact remain the rate of inflation in Tanzania (real inflation) does not represent what is going on in the street. Tandale upo!!!

 

[Mdondoaji]

Nipo,nawasikiliza laymen wa uchumi hapa

Wewe nishakugundua ni mweupe wa uchumi badala ya kuleta hoja unajitia kutaja taja general information ambayo haina validity yeyote. Sisi tushakuambia kama wanasema inflation wanataka kubadili economic model yao na kuondoa food kama moja ya determinant to measure real inflation (I guess kwasababu headline inflation uliyoitaja haitumiki kwakuwa inaunderstate the actual inflation of the country) then obvious that is a move to lower the level of inflation and that is why inflation ya BOT haiendani na real inflation mitaani.

Na hii ndio argument ya baadhi yetu hapa sasa wewe unasubiri utafuniwe upandie pandie ili nawewe uoneshe kwamba wewe ni economist!!!! Nakuuliza lete argument unamention forms of inflation !!! nimekuuliza lete arguments za kwanini food haifai unajiumauma haya mzee kadanganye wenzio vijiweni na sio hapa JF kwaheri sitaargue na wewe tena!!!

 

[TandaleOne]

Wewe nishakugundua ni mweupe wa uchumi badala ya kuleta hoja unajitia kutaja taja general information ambayo haina validity yeyote. Sisi tushakuambia kama wanasema inflation wanataka kubadili economic model yao na kuondoa food kama moja ya determinant to measure real inflation (I guess kwasababu headline inflation uliyoitaja haitumiki kwakuwa inaunderstate the actual inflation of the country) then obvious that is a move to lower the level of inflation and that is why inflation ya BOT haiendani na real inflation mitaani.

Na hii ndio argument ya baadhi yetu hapa sasa wewe unasubiri utafuniwe upandie pandie ili nawewe uoneshe kwamba wewe ni economist!!!! Nakuuliza lete argument unamention forms of inflation !!! nimekuuliza lete arguments za kwanini food haifai unajiumauma haya mzee kadanganye wenzio vijiweni na sio hapa JF kwaheri sitaargue na wewe tena!!!

Tell me when u are done with ur words.Mbona habari iko wazi??Analysis gani unahitaji?And let me advice u,si kila kitu lazima u-comment.

 

[PatPending]

Tell me when u are done with ur words.Mbona habari iko wazi??Analysis gani unahitaji?And let me advice u,si kila kitu lazima u-comment.

Tandale ndugu yangu habari ipi hiyo iko wazi? Tusaidie pia na maoni yako kuhusiana na mada hii. Shukrani za dhati