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Tunisia: No spiralling prices

The fight against rising prices is providing  rather good news echoed by the Minister of Commerce and Handicrafts, Ridha Touiti who briefed, on Wednesday, medias on the domestic market and foreign trade in addition to many other topics, such as services, consumption, distribution network …

From January to February 2009, the price index recorded an unprecedented  change: only 0.7%, falling by 2.4% compared to a year ago, amounting to 3.3% against 5.7% during the same period of 2008;

Broken down in terms of slide, the latter dropped by 0.8% in the period between December 2008 and February 2009, compared with a 0.2% rise during the same period of the previous year.

These results are mainly credited to the fall in the prices of textile and clothing products, which dropped by 7.6% thanks to the start since January 31 of the sale season.
To a large extent, this drop is due to the sales season which began on 31 January. The minster mentioned “the State efforts to encourage manufacturers to reduce production costs, including through lower tariffs and the  offices’ subsidizing  of rising prices on international markets-the ultimate goal being to reduce the impact of this increase on prices at the local level- and the decline in import prices which has helped  squeeze prices in the Tunisian market.

The point is to know whether prices will keep declining  in the coming months and once the sales season comes to an end. According to projections made by the Ministry of Commerce, the inflation rate will continue its downward trend to stabilize at 3% in April,  below the rate set by the government, which is 3.5%.

At least four reasons lie behind these forecasts. First, the abundance of supply of the market which is provided with in sufficient quantities, exceeding sometimes demand. Then there is competition in the market due to the proliferation of traders. Above all, the prices of farming products which have a direct and decisive impact on the price index. However, climatic conditions and rainfall since the fall t suggest that farming sector will behave well leading to price stability, in accordance with  the theory of solidarity inflation according which  price changes are generally attributable primarily to the results of agricultural production.

Energy and food imports down sharply

Trade figures provide, if necessary, irrevocable proof that Tunisia is not immune to the global economic crisis insofar as exports have declined by 17.1%, while at the same time, imports have dropped too, to stand at 17.3%.
In doing so, the trade deficit stood at 18.1% and the coverage rate posts a 0.2% variation.

However, energy and food  are characterized by remarkable behaviour, having been heavily battered in recent years due to the turbulence of the global market. Thus, food imports fell by -34.2% while the energy is much better being at -53.2%. Other notable figure in terms of imports, imports of capital goods grew by 16%.

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