Tunisia’s Annual Inflation Falls in April

Brief Introduction

Tunisia’s annual inflation rate in April slowed to 6.9 percent from 7.1 percent in March, official data showed on Saturday. Inflation was 7.3 percent in February.

The central bank raised its key interest rate in February to 7.75 percent from 6.75 percent to combat high inflation, the third such hike in the past 12 months, Reuters reported.

Tunisia’s economy grew 2.5 percent in 2018 compared with 1.9 percent in the previous year, the state statistics institute said previously.

The controlled inflation rate has lead to higher economics growth in Tunisia. A low inflation rate will enhance distribution of income. A low inflation will also increase consumers’ and business’ purchasing power, thus increasing aggregated demand. A lower inflation will benefit lenders, since the interest rate is worth more. For borrowers, however, a low inflation will mean that the money paid as interest is worth more, thus increasing purchasing power. For the government, there may be political pressure.

Leave a Reply