Alarmed by skyrocketing inflation, the Bank of Tanzania (BoT) says the government may be forced to import food, mainly rice and sugar, to curb surging prices.

The importation of food would be done to meet shortages in the local market, which BoT fears could worsen the situation, especially if the harvest season yields low farm produce.

According to the bank, inflation minus food prices is just 8 per cent, which means that a surge in food prices accounts for over 80 per cent of the inflation rate. With the production of food declining due to inadequate rainfall and lack of effective measures to boost agriculture, especially in the key producing regions, Tanzanians have literally been abandoned to deal with the spiralling food prices.

Official statistics released last month put inflation at 24 per cent - the highest in the past fifteen years.

BoT says it is closely monitoring the trend of outputs from the harvest season countrywide before deciding on the necessity to import food items in order to bridge the shortfall caused by low harvests.

During a live interview with the state-owned television (TBC) in Arusha yesterday, central bank governor Professor Benno Ndulu said: “We are monitoring the food situation countrywide, especially rice. We are optimistic that the situation will not be as bad as last year”.

He said his office was striving to ensure that inflation was drastically cut down to single digit.

The BoT chief noted: “Inflation owing to food products, especially rice and sugar, accounts for about 65 per cent, while 11 per cent is due to oil. This means an intervention to bring down food prices is crucial as we are aware that the prices of rice and sugar in some countries are as low as 50 per cent compared to the prevailing domestic prices”

However, Prof Ndulu could not provide indicative figures on the possible quantities of food to be imported. The BoT governor told this paper recently that the bank expected the inflation rate in the country to fall to a single digit towards the end of this year.

He said then that it was in the nation’s capacity to arrest inflation caused by internal factors, adding that it was difficult to deal with inflation caused by a fluctuation in oil prices, which is determined by external factors.

Currently a kilogramme of rice is sold between Sh 2,200 and Sh 3,000/- at retail shops in most urban areas.

BoT’s latest monthly economic review issued last April shows that the national average wholesale price of a 100kg bag of rice was Sh 191, 658. This implies that the retail price will definitely be higher than the wholesale one.

The report also reveals a significant rise in the price of the same food item from the month of February, during which the same bag (100kg) was sold at Sh 178, 627, registering a 7.3 per cent increase within a month.

But the report shows a huge difference in rice prices within the year, as it reveals that the national average price average in March 2011 was Sh 93, 358, implying more that a 100 per cent increase within 12 months.

There is also a significant disparity between the price increase of rice and maize during the said period, with the price of maize, a staple food in Tanzania, increasing by a mere 1.1 per cent – from Sh 42, 449 to Sh 42, 918. The prices of other selected food items, such as beans, sorghum and potatoes, were on the decrease - between 1.4 and 4.3 per cent.

The skyrocketing food prices, particularly of rice, mean an escalation in the cost of living, which has been the source of government criticism by economists, politicians and the general public. Director General of the National Food Reserve Agency (NFRA) Charles Walwa told The Guardian recently that the production of rice for 2011/2012 season was 1.461 million tonnes while the national requirement was 816,000 tonnes.

NFRA was formed from its predecessor, the Strategic Grain Reserve (SGR), with the aim of maintaining a national optimal level of food reserves to address local food shortages with a view to responding to immediate emergency food requirements.