01 — OverviewExecutive Summary
Zanzibar's economy moved through July 2026 with a sharper inflation rise than the mainland, a government budget balancing a revenue shortfall against strong non-tax collections, and an external sector reshaped almost entirely by a single export: cloves. Five findings frame this update.
- Headline inflation rose to 6.0% in July 2026, from 4.1% a year earlier — nearly two full percentage points above the mainland's 4.2% — driven overwhelmingly by food prices, not the broader cost pressures seen on the mainland.
- Food inflation reached 11.1%, while non-food inflation actually eased to 1.9% — a pattern almost the reverse of the mainland, where food inflation has been falling and core/services inflation rising.
- Government resources reached only 74.1% of the monthly target in July, with a TZS 116.4 billion deficit financed through domestic borrowing, even as non-tax revenue collections beat target.
- Clove export earnings surged more than eleven-fold, from USD 3.6 million to USD 42.9 million in the year ending July 2026 — driven by both a large jump in volume and a 32.5% rise in the unit price — making cloves the single largest driver of Zanzibar's export growth.
- The current account surplus narrowed to USD 771.1 million, from USD 848.6 million, as 64.0% import growth outpaced 22.4% export growth, despite the clove windfall.
Read this alongside TICGL's mainland inflation analysis
Zanzibar's food-driven inflation surge is a useful contrast to the mainland's transport- and services-driven cycle, covered in TICGL/TERI's "Tanzania Shilling vs. Inflation Rates" — together the two pages give a fuller national picture of what is actually pushing prices up in 2026, and where.
Read: Tanzania Shilling vs. Inflation Rates →02 — At a GlanceKey Numbers
Zanzibar Headline, Food & Non-Food Inflation
Source: Office of the Chief Government Statistician, Zanzibar.
1. Inflation: A Food Story, Not a Broad-Based One
Food 11.1% vs non-food 1.9%Annual headline inflation in Zanzibar rose to 6.0% in July 2026, from 4.1% a year earlier, driven mainly by higher food prices, compounded by rising transport costs following an increase in fuel prices. Food inflation reached 11.1% — more than double the mainland's 4.1% food inflation over the same month, and moving in the opposite direction (mainland food inflation has been falling). Non-food inflation, by contrast, eased to 1.9%, from 3.9%, with moderation most evident in clothing and footwear and in housing, water, electricity, gas and other fuels.
| Group | Weight (%) | Jul-25 | Jun-26 | Jul-26 |
|---|---|---|---|---|
| Headline (all items) | 100.0 | 4.1 | 6.0 | 6.0 |
| Food & non-alcoholic beverages | 41.9 | 4.9 | 10.3 | 10.9 |
| Food (selected group) | 40.5 | 4.3 | 10.5 | 11.1 |
| Non-food (selected group) | 59.5 | 3.9 | 2.5 | 1.9 |
| Restaurants & accommodation services | 1.4 | 1.6 | 7.4 | 6.2 |
| Transport | 9.1 | 2.3 | 5.3 | 4.7 |
| Housing, water, electricity, gas & other fuels | 25.8 | 3.4 | 1.8 | 0.5 |
Source: Office of the Chief Government Statistician, Zanzibar.
2. Government Budget: Revenue Below Target, Deficit Financed Domestically
74.1% of monthly resource targetGovernment resources — domestic revenue plus grants — amounted to TZS 188.1 billion in July 2026, equivalent to 74.1% of the monthly target. Domestic revenue was TZS 179.6 billion (89.4% of target), with grants of TZS 8.5 billion making up the rest — grants came in well short of their TZS 53.0 billion estimate. Tax revenue reached TZS 152.9 billion, 87.1% of target, reflecting satisfactory performance in income tax, VAT, and excise duties. Non-tax revenue was the bright spot, at TZS 26.7 billion, 5.5% above target, driven by improved collections from administrative fees and charges.
Government expenditure reached TZS 304.5 billion — TZS 195.7 billion in development spending and TZS 108.7 billion in recurrent spending — well above the TZS 188.1 billion in resources collected. The resulting TZS 116.4 billion deficit was financed through domestic borrowing.
Zanzibar Government Resources by Category, July 2026
Zanzibar Government Expenditure, July 2026
Source: Ministry of Finance and Planning, Zanzibar.
3. Current Account: Surplus Intact, but Narrowing Fast
-9.1% year-on-yearZanzibar's current account remained in surplus — a structural feature of its economy, unlike the mainland's chronic deficit — but the surplus narrowed to USD 771.1 million in the year ending July 2026, from USD 848.6 million a year earlier, a 9.1% decline. The narrowing reflects 64.0% growth in imports of goods and services, which outpaced a still-solid 22.4% increase in exports.
Zanzibar Exports, Imports & Current Account Balance, Year Ending July
Source: Tanzania Revenue Authority, banks, and Bank of Tanzania computations.
4. The Clove Export Surge: Zanzibar's Standout Story
+1,100% year-on-yearNo single number in this update stands out more than clove exports: earnings jumped from USD 3.6 million in the year ending July 2025 to USD 42.9 million in the year ending July 2026. This was not a one-dimensional price story — export volume rose from roughly 800 tonnes to 7,800 tonnes, while the unit price also climbed 32.5%, to USD 61,200.8 per tonne. Together, cloves went from a minor line item to the dominant force in Zanzibar's export performance, even as other categories moved in different directions: seaweed export earnings fell 59.7%, and manufactured goods exports fell 21.0%, while fish and fish products (+28.6%) and other exports (+52.2%) also grew.
Zanzibar Export Composition, Year Ending July 2025 vs. 2026
| Category | 2025 | 2026p | % change |
|---|---|---|---|
| Cloves (traditional) | 3.6 | 42.9 | +1,100+ |
| Seaweeds | 3.4 | 1.4 | -59.7 |
| Manufactured goods | 16.0 | 12.6 | -21.0 |
| Fish & fish products | 1.0 | 1.3 | +28.6 |
| Other exports | 8.2 | 12.4 | +52.2 |
| Sub-total (non-traditional + other) | 28.5 | 27.7 | -2.9 |
| Grand total exports of goods | 32.1 | 70.6 | +119.9 |
Source: Tanzania Revenue Authority and Bank of Tanzania computations.
A more-than-doubling of total goods exports, driven almost entirely by one commodity, is a windfall worth banking rather than budgeting around as a new baseline — clove prices and yields are both known to swing sharply from year to year, and the broader export base (seaweed, manufactured goods) actually contracted this period.
5. Import Growth: Capital and Consumer Goods Lead
+79.1% year-on-year (goods)Imports of goods and services rose 64.0% to USD 1,057.7 million in the year ending July 2026, driven by higher imports of capital and consumer goods. Capital goods imports grew from USD 67.2 million to USD 248.7 million, led by machinery and mechanical appliances and industrial transport equipment. Consumer goods imports grew 82.3%, to USD 126.2 million, reflecting higher inflows of other consumer goods and non-industrial transport equipment. Intermediate goods imports grew a more moderate 47.0%, to USD 598.4 million.
Zanzibar Imports by Category, Year Ending July 2025 vs. 2026
Source: Tanzania Revenue Authority and Bank of Tanzania computations.
03 — SynthesisCross-Cutting Synthesis
At 6.0% and food-driven, Zanzibar's inflation is running well above the mainland's and is concentrated in a category — food — that hits lower-income households hardest.
A revenue shortfall against target and a deficit financed by domestic borrowing show the fiscal side is not yet capturing the scale of this year's export windfall.
A current account surplus — even a narrowing one — is a structural advantage Zanzibar's economy has that the mainland does not currently share.
Investing windfall clove earnings into broadening the export base (seaweed, fisheries, manufacturing) would reduce next year's exposure to a repeat of this year's single-commodity swing.
04 — RecommendationsWhat This Means for Decision-Makers
Priority 1 — Target Food Prices Directly
- Given inflation here is overwhelmingly food-driven, prioritise food-supply and market-access interventions over broader monetary measures better suited to mainland-style core/transport inflation.
- Track the food/non-food inflation gap monthly as the clearest single indicator of where Zanzibar's price pressure sits.
Priority 2 — Convert the Clove Windfall into Fiscal Space
- Assess whether current tax and levy structures are capturing an appropriate share of this year's clove export windfall for the domestic revenue base.
- Use windfall-linked revenue, where captured, to reduce reliance on domestic borrowing to finance the recurring budget deficit.
Priority 3 — Plan for Export Base Diversification
- Treat this year's clove-driven export jump as a one-off opportunity rather than a new baseline, given clove yields and prices are historically volatile.
- Support the seaweed and manufactured-goods export categories that contracted this year, to broaden the base ahead of any future clove price correction.
"Zanzibar's numbers this year tell two stories at once — a household-level inflation problem concentrated almost entirely in food, and an export windfall concentrated almost entirely in one commodity. Neither story is really about the exchange rate or global conditions; both are close to home, and both are the kind of thing targeted policy, not general macro management, can actually move."
— TICGL / Tanzania Economic Research Institute (TERI)
05 — Sources & Data NotesReferences, Data Sources and Limitations
Bank of Tanzania, Monthly Economic Review, August 2026 edition (data through July 2026), Section 3.0 — Economic Performance in Zanzibar, drawing on Zanzibar-specific tables 3.1.1, 3.2.1, 3.2.2, 3.3.1, 3.3.2 and 3.3.3.
- Primary data: Office of the Chief Government Statistician, Zanzibar (inflation); Ministry of Finance and Planning, Zanzibar (budgetary operations); Tanzania Revenue Authority, banks, and Bank of Tanzania (external sector).
- Method: Export and import figures originally reported in thousands of USD (Table 3.3.2/3.3.3) have been converted to millions of USD in this analysis for consistency with the current account summary (Table 3.3.1).
- Known limitations: The Bank of Tanzania's Zanzibar section does not publish a full 13-month monthly time series for inflation or the current account in the way it does for the mainland — the comparisons on this page use the three published reference points (Jul-25, Jun-26, Jul-26 for inflation; year ending July 2025 and 2026p for external sector), not a continuous monthly trend. 2026 figures throughout are provisional (p).
- Related TICGL analysis: TICGL/TERI, "Tanzania Shilling vs. Inflation Rates" and "Tanzania's Economy in August 2026" (mainland).
06 — Quick AnswersFrequently Asked Questions
What is Zanzibar's inflation rate as of July 2026?
Annual headline inflation in Zanzibar rose to 6.0% in July 2026, from 4.1% a year earlier, driven mainly by higher food prices (food inflation reached 11.1%) compounded by rising transport costs following an increase in fuel prices. Non-food inflation eased to 1.9%, from 3.9%.
Is Zanzibar's inflation driven by the same factors as mainland Tanzania's?
Not entirely. Zanzibar's inflation surge is overwhelmingly food-driven — food inflation of 11.1% against non-food inflation of just 1.9% — while mainland Tanzania's inflation rise has been led more by transport and core (non-food, non-energy) inflation, with food inflation actually falling on the mainland over the same period.
How is Zanzibar's government budget performing?
Government resources reached TZS 188.1 billion in July 2026, 74.1% of the monthly target, with tax revenue at 87.1% of target and non-tax revenue exceeding target by 5.5%. Expenditure of TZS 304.5 billion produced a TZS 116.4 billion deficit, financed through domestic borrowing.
What happened to Zanzibar's clove exports in 2026?
Clove export earnings surged to USD 42.9 million in the year ending July 2026, from USD 3.6 million a year earlier, driven by both a large increase in export volume and a 32.5% rise in the unit price, making cloves the single largest driver of Zanzibar's export growth for the year.
Is Zanzibar's current account in surplus or deficit?
Zanzibar's current account remained in surplus but narrowed to USD 771.1 million in the year ending July 2026, from USD 848.6 million a year earlier, as import growth (64.0%) outpaced export growth (22.4%).
Muhtasari kwa Kiswahili
Hali ya Uchumi Zanzibar — Uchambuzi wa Agosti 2026. — Ripoti hii ya TICGL/TERI inachambua hali ya uchumi wa Zanzibar hadi Julai 2026, ikitumia Sehemu ya 3.0 ya Taarifa ya Kila Mwezi ya Uchumi ya Benki Kuu ya Tanzania (BOT), ikijikita kwenye mfumuko wa bei, bajeti ya serikali, na sekta ya nje.
Matokeo makuu: Mfumuko wa bei Zanzibar uliongezeka hadi asilimia 6.0 mwezi Julai 2026 (kutoka asilimia 4.1 mwaka mmoja uliopita), ukisukumwa hasa na bei za vyakula (mfumuko wa vyakula ulifikia asilimia 11.1), tofauti na Tanzania Bara ambako usafiri na huduma ndivyo vinasukuma mfumuko wa bei. Rasilimali za serikali (mapato + ruzuku) zilifikia TZS bilioni 188.1 mwezi Julai, sawa na asilimia 74.1 ya lengo, na nakisi ya TZS bilioni 116.4 ililipwa kwa mikopo ya ndani. Jambo kubwa zaidi ni mauzo ya karafuu nje ambayo yaliongezeka zaidi ya mara kumi na moja, kutoka dola milioni 3.6 hadi dola milioni 42.9, kutokana na ongezeko la kiasi kilichouzwa na bei ya wastani kuongezeka kwa asilimia 32.5. Urari wa mahesabu ya nje wa Zanzibar uliendelea kuwa na ziada lakini ulipungua hadi dola milioni 771.1 kutoka dola milioni 848.6, kwani uagizaji bidhaa uliongezeka kwa kasi zaidi (asilimia 64.0) kuliko mauzo nje (asilimia 22.4).
Uchambuzi wa TICGL unaonesha kuwa Zanzibar inakabiliwa na changamoto mbili tofauti: mfumuko wa bei unaotokana zaidi na vyakula (unaohitaji hatua za moja kwa moja kwenye upatikanaji wa chakula), na fursa ya mauzo makubwa ya karafuu ambayo inapaswa kutumika kuimarisha mapato ya serikali na kupanua wigo wa mauzo nje badala ya kutegemea zao moja tu.
- Mfumuko wa Bei (Julai 2026): asilimia 6.0 — juu kuliko Tanzania Bara
- Mfumuko wa Vyakula: asilimia 11.1 — chanzo kikuu cha mfumuko wa bei
- Mauzo ya Karafuu: dola milioni 42.9 — kutoka dola milioni 3.6 mwaka uliopita
- Urari wa Mahesabu ya Nje: dola milioni 771.1 — bado ni ziada, lakini imepungua
- Nakisi ya Bajeti (Julai 2026): TZS bilioni 116.4 — ililipwa kwa mikopo ya ndani
Chanzo: Benki Kuu ya Tanzania (BOT), Taarifa ya Kila Mwezi ya Uchumi, Agosti 2026, Sehemu ya 3.0; uchambuzi wa TICGL/TERI, Septemba 2026.