Tanzania’s inflation landscape in October 2025 reflects a stable macroeconomic environment, with headline inflation rising slightly to 3.5% from 3.4% in September, supported by a moderate increase in the Consumer Price Index from 115.54 (Oct 2024) to 119.63 (Oct 2025). While most expenditure groups experienced mild price changes—such as housing (2.4%), furnishings (3.1%), and transport (1.7%)—food inflation remained the dominant driver at 7.4%, given its heavy 28.2% weight in the NCPI basket. Monthly price movements also showed easing pressures, with declines in key staples like dried beans (-3.1%), finger millet (-2.5%), and poultry (-2.7%) contributing to the overall -0.2% monthly inflation. Core inflation remained subdued at 2.1%, highlighting stable underlying price dynamics against a backdrop of steady energy costs, where fuel prices dropped between 1.6% and 1.9%. Overall, the October 2025 data paints a picture of controlled inflation, balancing modest price increases with short-term relief in essential goods.

Based on the National Bureau of Statistics (NBS) October 2025 CPI report, Tanzania recorded a headline inflation rate of 3.5%, slightly up from 3.4% in September 2025. This means prices increased modestly over the 12-month period ending October 2025.

1. Annual Inflation by Major Groups (October 2025)

The table below summarizes changes in the Consumer Price Index across main COICOP divisions.

Table 1: Annual and Monthly Inflation Rates by Main Groups (2020 = 100)

2. Headline Inflation Trend (Oct 2024 – Oct 2025)

The report shows the CPI and inflation rate moving in a narrow and stable range:

• CPI increased from 115.54 (Oct 2024) to 119.63 (Oct 2025).
• Inflation ranged between 3.0% and 3.5% over 12 months.

Inflation Trend Summary

Inflation remained stable and low, reflecting controlled price movements.

3. Food Inflation (October 2025)

Food is the largest contributor to inflation due to its heavy weight (28.2%).

Key findings:

• Food inflation rose to 7.4%, up from 7.0% in September 2025.
• Food remains the most influential driver of overall inflation.

Monthly food price changes

(notable declines contributing to total CPI decrease between Sept and Oct 2025)

4. Core Inflation (October 2025)

Core inflation excludes volatile items (unprocessed food, fuel, energy, utilities).

Key findings:

• Core inflation decreased slightly to 2.1% (from 2.2% in September 2025).
• Reflects stable prices in non-volatile goods and services.

Core vs Non-core Indices

Non-core includes food and energy — main inflation sources.

5. Goods vs Services Inflation

Goods prices rose significantly faster than services.

6. Energy, Fuel & Utilities

Energy-related prices showed moderate inflation:

• Energy, Fuel, Utilities Index increased by 4.0% year-on-year.
• Monthly prices dropped by 1.4%, mostly due to declines in:
  • petrol (-1.9%)
  • diesel (-1.6%)
  • charcoal (-2.9%)
  • kerosene (-1.8%)
  • These contributed to lower monthly inflation (-0.2%).

7. Monthly Inflation (Sept 2025 – Oct 2025)

• Monthly CPI change: -0.2%
• Driven by price decreases in several food and energy items.

This indicates short-term price relief.

Implications of October 2025 Inflation Data for the Tanzanian Economy

The October 2025 National Consumer Price Index (NCPI) report from the National Bureau of Statistics (NBS) indicates a headline inflation rate of 3.5%, a marginal uptick from 3.4% in September. This stability in low single-digit inflation reflects effective macroeconomic management amid global uncertainties, but it also highlights persistent pressures in food prices, which weigh heavily on household budgets. Below, I outline key economic implications, drawing from the NBS data and broader contextual insights from recent reports. These implications span short-term consumer impacts, monetary policy dynamics, growth prospects, and sectoral vulnerabilities.

1. Enhanced Macroeconomic Stability and Investor Confidence

• Positive Outlook: The headline inflation rate's narrow range (3.0%–3.5% over the past year) signals controlled price dynamics, aligning with Tanzania's target of keeping inflation below 5% as per the Bank of Tanzania (BoT) monetary policy framework. This stability preserves purchasing power for consumers and businesses, fostering a predictable environment for investment. For instance, the Consumer Price Index (CPI) rose modestly from 115.54 in October 2024 to 119.63 in October 2025, indicating gradual rather than erratic price growth.
• Broader Economic Tie-In: Tanzania's economy grew by an estimated 6.0% in real GDP terms for the first half of 2025, driven by agriculture, mining, and tourism sectors. Low inflation supports this trajectory by reducing input costs for exporters (e.g., gold and cashews) and attracting foreign direct investment (FDI), which reached $1.2 billion in the first nine months of 2025, up 15% year-on-year. Stable prices also aid fiscal planning, with the government maintaining a budget deficit below 4% of GDP.
• Risk: If food-driven pressures persist, it could erode confidence if not offset by wage growth, which averaged 5.2% in formal sectors during 2025.

2. Household Welfare and Poverty Alleviation Challenges

• Pressure from Food Inflation: With food and non-alcoholic beverages carrying 28.2% weight in the NCPI basket, the 7.4% annual rise (up from 7.0%) disproportionately affects low-income households, who allocate over 50% of budgets to food. Monthly declines in staples like maize grains (-1.3%), dried beans (-3.1%), and vegetables (-0.7%) provided temporary relief, contributing to the overall -0.2% monthly CPI drop. However, the non-core index (including food) at 7.3% underscores volatility tied to weather and supply chains.
• Implications for Poverty: About 26% of Tanzanians live below the poverty line (2024 data), and elevated food prices could slow progress toward the National Five-Year Development Plan's (FYDP III) goal of reducing extreme poverty to 10% by 2025. Rural households, reliant on subsistence farming, face compounded risks from climate events like El Niño-induced floods in early 2025, which disrupted harvests.
• Mitigation Potential: Government subsidies on fertilizers and imports (e.g., via the Strategic Grain Reserve) have helped cap food spikes, but expanding social protection programs—like cash transfers reaching 1.5 million beneficiaries in 2025—could buffer impacts.

3. Monetary Policy and Interest Rate Environment

• Accommodative Stance: Core inflation's dip to 2.1% (from 2.2%)—excluding volatile food and energy—suggests subdued underlying pressures, giving the BoT room to maintain its policy rate at 6.0% (unchanged since mid-2024). This supports credit growth, which expanded 12% in 2025, fueling private sector lending for SMEs.
• Energy and Transport Dynamics: The 4.0% rise in the Energy, Fuel, and Utilities Index (despite a -1.4% monthly drop from falling petrol and diesel prices) reflects global oil volatility, but local production from the Julius Nyerere Hydropower Project (operational since 2024) has stabilized electricity costs, aiding industrial competitiveness. Transport inflation at 1.7% benefits logistics for exports.
• Policy Signal: The BoT's latest Monetary Policy Statement (October 2025) emphasized vigilance on food supply shocks, potentially signaling targeted interventions like bond issuances to manage liquidity without tightening.

4. Sectoral Growth and Structural Vulnerabilities

• Agriculture and Goods vs. Services Divergence: Goods inflation at 5.0% (vs. 1.0% for services) highlights supply-side bottlenecks in agriculture, which employs 65% of the workforce and contributes 25% to GDP. The 7.4% food inflation stems partly from post-harvest losses and export competition, but services stability (e.g., education at 3.0%) supports human capital development under FYDP III.
• Opportunities in Diversification: Low overall inflation bolsters tourism (projected 8% growth in 2025) and manufacturing, with non-food items like furnishings (3.1%) showing moderate gains. However, housing inflation at 2.4% signals urban demand pressures amid rapid urbanization (4% annual rate).
• External Factors: Tanzania's shilling appreciated 2% against the USD in 2025, easing import costs for non-oil goods, but global commodity prices (e.g., wheat up 5% due to Black Sea tensions) could reignite food pressures.

Summary Table: Key Implications by Economic Dimension

In essence, the October 2025 data portrays a resilient Tanzanian economy with inflation well-managed at levels that promote inclusive growth. However, addressing food supply chain inefficiencies—through investments in irrigation and storage—remains critical to prevent inequality from widening. Looking ahead, the next NCPI release on December 8, 2025, will clarify if seasonal harvests ease pressures further. For deeper dives, refer to BoT's quarterly reports or NBS updates.