00 - OVERVIEWExecutive Summary: Anchored Headline, Weakening Currency, Broadening Pressure
Inflation is anchored, but no longer narrow. Headline inflation held at 4.3% in September 2026 (3.4% a year earlier), but the rise was in core prices (4.1%, up from 2.2%), transport (14.0%) and energy (7.8%), while food inflation fell from 7.0% to 3.9%.
The shilling is the transmission channel. It averaged TZS 2,654.91/USD, about 7.4% weaker year on year (8.2% end-period), roughly twice the inflation rate, as oil rose to USD 102.3 a barrel and the import bill swelled.
Policy tightened. The CBR rose to 6.25%; real policy rate is about +1.9 points. Credit (+34.2%) and M3 (+25.9%) are growing fast, a second reason to stay vigilant.
Inflation vs the Shilling, Sep-2025 to Sep-2026
| Test | Evidence | Reading |
|---|---|---|
| Anchor | 4.3% inside 3-5%; below EAC ceiling 8% | Holding |
| Breadth | Core 2.2% to 4.1%; services 1.3% to 6.1% | Broadening |
| Currency | TZS -7.4% y/y (avg); BoT sold only USD 7.2M in Sep | Orderly depreciation |
| External | CA deficit +28%; reserves 4.3 months | Adequate, thinner |
01 - INFLATIONWhat Is Driving Prices? Headline, Core, Food and Energy
Annual inflation was flat at 4.3% in August and September. Under the surface, the driver moved from food (2025) to energy, transport and services (2026).
Twelve-Month Inflation by Component
Contribution to Headline Inflation
Fuel Pass-Through: Oil vs Transport Inflation, 2026
| Group (annual %) | Sep-25 | Aug-26 | Sep-26 |
|---|---|---|---|
| Headline | 3.4 | 4.3 | 4.3 |
| Core | 2.2 | 4.1 | 4.1 |
| Food and non-alcoholic beverages | 7.0 | 3.7 | 3.9 |
| Transport | 2.1 | 13.8 | 14.0 |
| Energy, fuel and utilities | 3.7 | 8.5 | 7.8 |
| Services | 1.3 | 5.9 | 6.1 |
| Goods | 4.7 | 3.5 | 3.4 |
| Restaurants and accommodation | 1.0 | 3.0 | 2.9 |
Table 1.1. Source: NBS and BoT, Table 2.1.1. Zanzibar headline inflation eased to 4.3% from 5.6% in August (target 5%).
02 - THE SHILLINGDepreciation Faster Than Inflation: History and Today
The shilling averaged TZS 2,654.91 per USD in September 2026 (2,657.01 in August), a marginal gain on the month. On an annual basis it is about 7.4% weaker, largely a base effect after a sharp appreciation in September 2025. Foreign exchange conditions were stable, with turnover of USD 151.7 million supported by gold, commodity and tourism inflows.
Annual Average TZS/USD and Inflation, 2018-2025
Cumulative Move Since December 2025
| Year | Inflation % | Avg TZS/USD | End-period TZS/USD | CA balance (USD M) |
|---|---|---|---|---|
| 2022 | 4.3 | 2,303.0 | 2,308.9 | -5,482.2 |
| 2023 | 3.8 | 2,382.1 | 2,501.4 | -2,960.6 |
| 2024 | 3.1 | 2,597.4 | 2,374.7 | -2,379.8 |
| 2025 | 3.3 | 2,537.6 | 2,450.2 | -2,049.4 |
| Sep-2026 | 4.3 | 2,654.9 | 2,642.3 | -2,397.5 (12m) |
- 2023-24: a 9% average depreciation (2,382 to 2,597) came with inflation of only 3.1-3.8%, so pass-through was contained.
- 2026: depreciation coincides with an oil shock (Brent peak USD 120.4 in April), so both import prices and the exchange rate push in the same direction.
- Foreign investors can now buy government securities without geographic limits (July 2026 amendment): a new source of FX inflows but also of volatility if capital reverses.
03 - POLICY & REAL RATESDid the BoT Tighten Enough?
The MPC raised the CBR to 6.25% for the quarter ending September 2026 from 5.75%, aiming to contain second-round effects from energy, fertilizer and transport costs. The 7-day interbank rate stayed within the 4.75-7.75% corridor, ending at 6.67% overall.
Real Rates (Nominal Rate minus 4.3% Inflation)
| Rate (Sep-26) | Nominal % | Real % |
|---|---|---|
| Central Bank Rate | 6.25 | +1.95 |
| Overall T-bill yield | 4.85 | +0.55 |
| 10-year bond | 10.69 | +6.39 |
| Overall lending rate | 15.54 | +11.24 |
| 12-month deposit rate | 9.59 | +5.29 |
| Savings deposit rate | 2.95 | -1.35 |
04 - MONEY, CREDIT & EXTERNALDemand, Imports and the Currency Backstop
Money and Credit Growth, Sep-2026 (y/y)
External Sector, Year to September
| Indicator (USD M) | 2025 | 2026p | Change |
|---|---|---|---|
| Exports of goods and services | 17,568.9 | 21,065.1 | +19.9% |
| Imports of goods and services | 17,848.9 | 22,134.2 | +24.0% |
| Gold exports | 4,431.2 | 5,834.5 | +31.7% |
| Petroleum imports | 2,213.1 | 3,813.6 | +72.3% |
| Current account balance | -1,879.3 | -2,397.5 | +27.6% |
| Gross reserves | - | 6,031.9 | 4.3 months |
- Fiscal: July revenue TZS 3,502.2B beat target by 9.5%; spending TZS 3,572.5B.
- Debt: national debt USD 52,344.2M; external USD 36,784.2M (65.3% in USD, so depreciation raises debt service in shillings).
05 - OUTLOOK & ACTIONWhat to Watch and What to Do
| Driver | Risk to shilling and prices | Indicator |
|---|---|---|
| Middle East energy | Higher fuel and fertilizer costs; wider CA deficit | Oil (USD 102.3), transport CPI |
| El Niño (Vuli rains) | Food supply shocks end the food-price cushion | NFRA stocks, wholesale prices |
| Capital flows | Foreign bond access can cut or amplify FX swings | Reserves, BoT FX sales |
| Credit boom | 34% credit growth feeds demand and imports | Private credit, M3 |
| Exports | Gold, tourism and manufacturing offset imports | Gold price (USD 4,319) |
- Businesses: hedge USD costs, review import-priced contracts, expect CBR to stay firm.
- Investors: shilling bond yields offer real returns (10-year real +6.4%) with FX risk.
- Policymakers: sustain reserves above 4 months, lift export value addition, watch core inflation.
06 - SOURCESSources & Data Notes
- Bank of Tanzania, Monthly Economic Review, October 2026: Tables 2.1.1, 2.2.1, 2.3.1, 2.7.1, A1, A4, A9, A10.
- National Bureau of Statistics, Ministry of Finance, TRA, World Bank Pink Sheet as cited by BoT.
- TICGL/TERI arithmetic: real rates (nominal minus 4.3%), depreciation (end-period 2,442.8 to 2,642.3 = +8.2%; Dec-25 to Sep-26 +7.8%), indexes. Data are provisional (p). BoT quotes 7.4% for average-rate depreciation. This page is research information, not financial advice.
07 - QUICK ANSWERSFrequently Asked Questions
What is Tanzania's inflation rate in September 2026?
Headline inflation was 4.3%, unchanged from August and inside the 3-5% target. Core was 4.1%, food 3.9% and energy 7.8%.
How much has the Tanzanian shilling depreciated?
It averaged TZS 2,654.91 per USD, about 7.4% weaker year on year; end-period it moved from 2,442.8 to 2,642.3 (about 8.2%).
What is the Bank of Tanzania Central Bank Rate?
6.25% for the quarter ending September 2026, up from 5.75%, to contain second-round inflation from energy, fertilizer and transport costs.
Is the current account deficit widening?
Yes, to USD 2,397.5 million in the year to September 2026 from USD 1,879.3 million; reserves of USD 6,031.9 million cover 4.3 months of imports.
Muhtasari kwa Kiswahili
Je, shilingi ya Tanzania na mfumuko wa bei vinaelekea wapi? Kwa mujibu wa Mapitio ya Kila Mwezi ya Uchumi ya Benki Kuu (Oktoba 2026): mfumuko wa bei ulikuwa asilimia 4.3 Septemba 2026, ndani ya lengo la asilimia 3-5, lakini shilingi imedhoofika kwa takriban asilimia 7.4 (wastani) kwa mwaka, ikiuzwa wastani wa TZS 2,654.91 kwa dola.
- Mfumuko wa msingi umepanda kutoka asilimia 2.2 hadi 4.1; usafirishaji asilimia 14.0, nishati asilimia 7.8; chakula kimeshuka hadi asilimia 3.9 kutokana na mavuno mazuri.
- Sera: Kiwango cha Benki Kuu (CBR) kimepanda hadi asilimia 6.25 kutoka 5.75; mikopo kwa sekta binafsi imekua asilimia 34.2 na M3 asilimia 25.9.
- Sekta ya nje: nakisi ya akaunti ya sasa imepanda hadi USD milioni 2,397.5; akiba ya fedha za kigeni ni USD milioni 6,031.9 (miezi 4.3 ya uagizaji).
- Mtazamo: bei ya mafuta (USD 102.3 kwa pipa), mvua za El Niño na mtiririko wa mitaji vitaamua kama mfumuko utabaki ndani ya lengo. Wafanyabiashara wajikinge dhidi ya hatari ya sarafu.
Chanzo: BoT Monthly Economic Review, Oktoba 2026; mahesabu ya TICGL/TERI. Maelezo zaidi: economist@ticgl.com.