The National Consumer Price Index (NCPI) for August 2025 reveals a stable yet nuanced inflationary landscape in Tanzania, with the annual headline inflation rate rising marginally to 3.4% from 3.3% in July 2025. This slight uptick, driven predominantly by a 7.7% increase in food and non-alcoholic beverage prices, underscores the significant influence of the agricultural sector, which holds a 28.2% weight in the CPI basket. Despite a minor monthly decline in the overall index from 119.85 to 119.77, reflecting seasonal price drops in staples like maize and vegetables, core inflation remained steady at 2.0%, indicating underlying price stability. These figures highlight Tanzania's balanced economic management amid a projected 6% GDP growth, though persistent food price pressures pose challenges for household affordability and rural livelihoods.

Headline Inflation

• The annual headline inflation rate (all items in the CPI basket) stood at 3.4% in August 2025, up slightly from 3.3% in July 2025.
• This means that on average, prices of goods and services were 3.4% higher in August 2025 compared to August 2024.
• The overall index rose from 115.78 in August 2024 to 119.77 in August 2025.

Food and Non-Alcoholic Beverages

• Inflation in this category was 7.7% in August 2025, compared to 7.6% in July 2025.
• This remains the biggest driver of inflation, since food carries the largest weight (28.2%) in the basket.

Non-Food Items (Excluding Food & Beverages)

• Inflation rose slightly to 1.6% in August 2025, up from 1.5% in July 2025.

Core Inflation

• Excluding volatile items (unprocessed food, energy, and utilities), core inflation was 2.0% in August 2025, compared to 1.9% in July 2025.
• This shows relatively stable underlying price trends.

Selected Groups (Year-on-Year Changes)

• Alcoholic beverages & tobacco: 2.9%
• Clothing & footwear: 1.7%
• Housing, water, electricity, gas & fuels: 2.1%
• Transport: 1.4%
• Education services: 3.0%
• Restaurants & accommodation: 0.9%
• Insurance & financial services: 0.6%

Monthly Price Movements (July → August 2025)

The CPI slightly declined from 119.85 in July 2025 to 119.77 in August 2025 (-0.1%), due to lower prices of several items:

• Food items falling in price: maize (-1.9%), maize flour (-0.3%), fresh fish (-0.3%), vegetables (-1.8%), Irish potatoes (-2.7%), sweet potatoes (-3.3%), lentils (-4.5%), beans (-2.5%), cowpeas (-3.4%).
• Non-food items falling in price: men’s garments (-0.6%), children’s garments (-0.5%), charcoal (-0.7%), firewood (-5.5%), petrol (-0.4%).

Summary:
Tanzania’s inflation in August 2025 remained stable and moderate at 3.4%, mainly driven by food prices (7.7% increase). Core inflation (2.0%) shows underlying stability, but seasonal drops in key food and fuel items slightly reduced the monthly index.

Table 1: Tanzania Overall Inflation Rates

Table 2: Core Inflation and Other Key Indices (August 2025)

Key Highlights:

• Headline inflation increased to 3.4% in August 2025 from 3.3% in July 2025
• Food inflation rose to 7.7% in August 2025 from 7.6% in July 2025
• Core inflation increased to 2.0% in August 2025 from 1.9% in July 2025
• Monthly CPI declined by 0.1% from July to August 2025
• Food and non-alcoholic beverages have the highest weight (28.2%) in the CPI basket

Overview of Tanzania's Inflation and Economic Implications

Tanzania's headline inflation rate of 3.4% in August 2025 reflects a stable macroeconomic environment, remaining within the Bank of Tanzania's (BOT) target range of 3-5%. This moderate level, up slightly from 3.3% in July, indicates controlled price pressures overall, supported by prudent monetary policies and improved supply conditions in non-food sectors. However, the data highlights persistent challenges, particularly from food price increases, which could strain household budgets and exacerbate inequality. Drawing from the attached National Bureau of Statistics (NBS) document and recent economic analyses, this inflation profile supports robust GDP growth projections while underscoring the need for targeted interventions in agriculture and food security. Below, I break down the key economic implications.

Positive Implications for Economic Stability and Growth

• Macroeconomic Resilience and Policy Effectiveness: The low headline inflation rate aligns with BOT's cautious accommodative monetary policy for 2025/26, which aims to balance inflation control with economic expansion. In July 2025, BOT reduced its central bank rate (CBR) by 25 basis points to 5.75%, marking the fifth cut in a series to stimulate lending and investment while keeping inflation anchored. This has contributed to foreign exchange reserves reaching approximately USD 6 billion by June 2025—one of the highest levels in recent years—bolstering the Tanzanian shilling's stability (USD/TZS at around 2,470 in early August 2025). Stable inflation enhances business confidence, attracts foreign direct investment (FDI), and supports Tanzania's goal of drawing USD 15 billion in investments in 2025, focusing on manufacturing, clean energy, transport, and minerals.
• Strong GDP Growth Momentum: Tanzania's economy is projected to grow by 6.0% in 2025, up from 5.5-5.6% in 2024, driven by sectors like mining (which led Q1 2025 growth at 5.4%) and services. Low core inflation (2.0% in August, excluding volatile items) signals underlying price stability, reducing risks of overheating and allowing for sustained expansion. The IMF forecasts inflation at 4.0% for the year, complementing this growth outlook. At current prices, GDP is expected to reach USD 88 billion in 2025, positioning Tanzania as one of East Africa's fastest-growing economies.
• Benefits for Non-Food Sectors: Inflation in categories like transport (1.4%), housing and utilities (2.1%), and services (0.8%) remains subdued, aided by monthly declines in energy prices (e.g., petrol -0.4%, firewood -5.5%, charcoal -0.7%). This lowers operational costs for businesses, boosts competitiveness in exports (e.g., minerals and agriculture), and supports fiscal health. The energy, fuel, and utilities index rose only 2.6% annually, reflecting easing global commodity pressures. Overall, non-food inflation at 1.6% preserves purchasing power for middle-income groups and encourages consumer spending in durable goods.

Challenges and Risks from Food-Driven Inflation

• Impact on Cost of Living and Poverty: Food and non-alcoholic beverages, weighted at 28.2% in the CPI basket, saw inflation rise to 7.7% in August from 7.6% in July, making it the primary inflation driver. This erodes real incomes, particularly for rural and low-income households where food constitutes over 50% of expenditures. Despite a monthly CPI decline of 0.1% due to seasonal drops in items like maize (-1.9%), vegetables (-1.8%), and tubers (e.g., sweet potatoes -3.3%), year-on-year food price hikes could push more people into poverty if not addressed. For context, food inflation surged from 1.4% in March 2024 to 5.4% in March 2025, driven by weather disruptions and supply chain issues. This threatens post-pandemic food security recovery, as global food prices (per FAO index) are 7.6% higher than last year.
• Broader Economic Vulnerabilities: High non-core inflation (7.3%, including volatile foods) could amplify external shocks, such as global commodity volatility or climate events affecting agriculture (which anchors 25-30% of GDP). If food prices continue rising, it might fuel wage demands, potentially spiraling into broader inflation. Additionally, the goods index (4.9% inflation) reflects import dependencies, which could worsen with shilling fluctuations.
• Inequality and Social Implications: Urban-rural divides may widen, as food inflation hits subsistence farmers hardest. While core stability benefits formal sectors, informal workers (over 80% of employment) face reduced affordability, potentially slowing consumption-led growth.

Policy Responses and Future Outlook

BOT's strategy emphasizes inflation targeting while supporting 6%+ growth, with tools like reserve requirements and open market operations to manage liquidity. Fiscal measures, including subsidies for agriculture and infrastructure investments, could mitigate food risks. The IMF's 2025 Article IV consultation notes improving conditions under prudent management, with growth expected to average 6% long-term. East Africa's regional outlook projects easing inflation (from 20.8% in 2024 to 19.1% in 2025), but Tanzania's lower rate positions it favorably.

In summary, August 2025's inflation data underscores Tanzania's resilient economy, with low overall rates fostering investment and growth amid a projected 6% GDP expansion. However, elevated food inflation poses risks to inclusive development, necessitating enhanced agricultural productivity and social safety nets for sustained stability.

Tanzania’s inflation in March 2025, as detailed in the April 2025 Monthly Economic Review, shows an upward trend in headline inflation, driven primarily by rising food and energy prices, while core inflation has declined. Below, we outline the current inflation trends and their drivers, using specific figures from the document to provide clarity.

Headline Inflation Trend

Figure: Headline inflation rose to 3.3% in March 2025, up from 3.0% in March 2024.

Explanation:

• Trend: The 0.3 percentage point increase indicates a moderate upward trend in overall price levels, but inflation remains within national targets and regional benchmarks of the East African Community (EAC) and Southern African Development Community (SADC).
• Drivers: The document attributes this rise primarily to increases in food and energy prices (Page 3). These components have exerted significant upward pressure on the Consumer Price Index (CPI), which is based on a 2020=100 index.
• Context: Despite the increase, headline inflation is relatively stable, supported by the Bank of Tanzania’s monetary policy, which maintains the Central Bank Rate at 6% to keep inflation expectations below the 5% medium-term target.

Food Inflation Trend

Figure: Food inflation surged to 5.4% in March 2025, up from 1.4% in March 2024.

Explanation:

• Trend: The sharp 4.0 percentage point increase reflects significant price pressures in the food sector, which has a CPI weight of 26.1%.
• Drivers: Higher prices for staple crops—maize, rice, and beans—are the primary drivers, amplified by logistical challenges in transportation due to seasonal heavy rains. These rains disrupted supply chains, increasing costs for producers and traders.
• Mitigation: The National Food Reserve Agency (NFRA) held 587,062 tonnes of food stocks (mainly maize and paddy) and released 32,598 tonnes to local traders by March 2025, which helped mitigate further price spikes. The overall food supply remained adequate, preventing even higher inflation.
• Impact: The document notes that unprocessed food inflation’s contribution to overall inflation has increased, making it a key driver of the 3.3% headline rate.

Core Inflation Trend

Figure: Core inflation decreased to 2.2% in March 2025 from 3.9% in March 2024.

Explanation:

• Trend: The 1.7 percentage point decline indicates easing price pressures from non-food items, which constitute 73.9% of the CPI basket.
• Drivers: Core inflation excludes volatile items like food, energy, and utilities. The reduction suggests stable or declining prices for services and non-food goods, reflecting lower underlying inflationary pressures.
• Impact: The document highlights that core inflation’s contribution to overall inflation has gradually diminished, with unprocessed food inflation taking a larger role. This decline helps moderate the headline inflation rate despite food and energy spikes.

Energy, Fuel, and Utilities Inflation Trend

Figure: Energy, fuel, and utilities inflation increased to 7.9% in March 2025 from 6.6% in March 2024.

Explanation:

• Trend: The 1.3 percentage point rise makes this the highest inflation component, with a CPI weight of 5.7%.
• Drivers: The increase is primarily due to rising prices of petroleum products and wood charcoal, the latter linked to scarcity following seasonal rains (Page 5). The document notes the weight of wood charcoal in the energy component but does not quantify it.
• Impact: High energy inflation significantly contributes to the 3.3% headline rate, as energy costs affect transportation, production, and household expenses, amplifying overall price pressures.

Additional Context and Drivers

• Global Commodity Prices: Rising global fertilizer prices (up 2% to USD 615.13 per tonne) increase agricultural input costs, indirectly contributing to food inflation by raising production expenses. Conversely, a 4% drop in crude oil prices to USD 70.70 per barrel may have tempered energy inflation slightly, though domestic petroleum price hikes dominated.
• Monetary Policy: The Bank of Tanzania’s stable Central Bank Rate (6%) and adequate liquidity management (no reverse repo auctions) help anchor inflation expectations, preventing runaway price increases despite food and energy pressures.
• CPI Dynamics: The CPI weights show food (26.1%) and energy (5.7%) as smaller shares compared to core items (73.9%), but their volatility gives them outsized impacts on headline inflation. Month-on-month data shows food inflation at 2.5% and energy at 2.9% for March 2025, reinforcing their role as key drivers.

Conclusion

In March 2025, Tanzania’s headline inflation rose to 3.3% (from 3.0% in 2024), driven by surging food inflation (5.4%, up from 1.4%) and energy, fuel, and utilities inflation (7.9%, up from 6.6%). Food price increases, fueled by maize, rice, and bean costs and rain-related logistical challenges, and energy price hikes, driven by petroleum and wood charcoal, are the primary drivers. Core inflation’s decline to 2.2% (from 3.9%) moderate’s overall pressures, but unprocessed food’s growing contribution underscores its significance. The NFRA’s 587,062-tonne food stock and 32,598-tonne release helped contain food inflation, keeping headline inflation within EAC and SADC benchmarks.

Key Figures: Tanzania’s Inflation Trends and Drivers (March 2025)

Notes:

• All inflation figures reflect March 2025 unless stated otherwise.
• Food inflation driven by maize, rice, bean prices, and logistical issues from rains.
• Energy inflation driven by petroleum and wood charcoal price hikes.
• Source refer to the April 2025 Monthly Economic Review.

Tanzania’s food inflation is a significant component of its overall inflationary pressures, as detailed in the April 2025 Monthly Economic Review. Below, we compare food inflation with other key inflation components—headline, core, and energy, fuel, and utilities inflation—using specific figures from the document to highlight their relative levels, trends, and drivers.

Food Inflation

Figure: Food inflation was 5.4% in March 2025, up significantly from 1.4% in March 2024.

Explanation:

• Drivers: The increase was primarily due to higher prices for staple crops like maize, rice, and beans, exacerbated by logistical challenges in transportation caused by seasonal heavy rains. These disruptions increased supply chain costs, pushing food prices higher.
• Mitigation: The National Food Reserve Agency (NFRA) held 587,062 tonnes of food stocks (mainly maize and paddy) and released 32,598 tonnes to local traders by March 2025, which helped mitigate further price spikes.
• Context: Despite the rise, the overall food supply remained adequate, and food inflation’s contribution to overall inflation has grown, particularly from unprocessed food.

Headline Inflation

Figure: Headline inflation was 3.3% in March 2025, up from 3.0% in March 2024.

Explanation:

• Comparison: Food inflation (5.4%) is notably higher than headline inflation (3.3%), indicating that food prices are a major driver of overall price increases. The document notes that headline inflation’s rise was largely attributed to increases in food and energy prices.
• Context: Headline inflation includes all components of the Consumer Price Index (CPI), such as food, energy, and non-food items. Despite the uptick, it remains within national targets and regional benchmarks of the East African Community (EAC) and Southern African Development Community (SADC).
• Relative Impact: The higher food inflation rate suggests that food prices are pulling headline inflation upward, though other components moderate the overall rate.

Core Inflation

Figure: Core inflation decreased to 2.2% in March 2025 from 3.9% in March 2024.

Explanation:

• Comparison: Food inflation (5.4%) is more than double core inflation (2.2%), highlighting a stark contrast. Core inflation, which excludes volatile items like food, energy, and utilities, reflects underlying price pressures from non-food items.
• Trend: The decline in core inflation indicates reduced pressure from non-food items, such as services and goods excluding food and energy. The document notes that core inflation’s contribution to overall inflation has diminished, with unprocessed food inflation taking a larger role.
• Context: The lower core inflation rate helps keep headline inflation in check, but the high food inflation underscores the volatility of food prices compared to more stable non-food components.

Energy, Fuel, and Utilities Inflation

Figure: Energy, fuel, and utilities inflation increased to 7.9% in March 2025 from 6.6% in March 2024.

Explanation:

• Comparison: Energy, fuel, and utilities inflation (7.9%) is the highest among the components, surpassing food inflation (5.4%). This category saw the largest year-on-year increase, driven by rising prices of petroleum products and wood charcoal, the latter linked to scarcity following seasonal rains.
• Context: The document highlights that petroleum and wood charcoal price hikes were significant contributors. The weight of wood charcoal in the energy component of the CPI basket is noted but not quantified.
• Relative Impact: Energy inflation’s high rate amplifies overall price pressures more than food inflation, though both are key drivers of the 3.3% headline inflation.

Contribution to Overall Inflation

Figure: Unprocessed food inflation’s contribution to overall inflation has increased, while core inflation’s contribution has gradually diminished.

Explanation:

• Trend: The document indicates a shift in inflation dynamics, with unprocessed food (part of food inflation) becoming a more significant driver of headline inflation compared to core inflation. This is evident from food inflation’s high rate (5.4%) versus core inflation’s decline (2.2%).
• Impact: Food and energy inflation (7.9%) together exert stronger upward pressure on headline inflation (3.3%) than core inflation, reflecting the volatility of these components. The NFRA’s release of 32,598 tonnes of food stocks helped temper food inflation’s impact.
• Data Insight: The CPI weights show food and non-alcoholic beverages at 26.1% of the basket, energy, fuel, and utilities at 5.7%, and core items at 73.9%, suggesting food and energy have disproportionate impacts relative to their weights due to their volatility.

Conclusion

In March 2025, Tanzania’s food inflation (5.4%) is significantly higher than headline inflation (3.3%) and core inflation (2.2%) but lower than energy, fuel, and utilities inflation (7.9%). Food inflation, driven by maize, rice, and bean price hikes due to rain-related logistical issues, is a key contributor to overall inflation, alongside energy. Core inflation’s decline reflects easing non-food pressures, but the high food and energy rates highlight their volatility and impact on household costs. The NFRA’s 587,062-tonne food stock and 32,598-tonne release helped mitigate food inflation, keeping headline inflation within national and regional targets.

Key Figures: Tanzania’s Food Inflation vs. Other Inflation Components (March 2025)

Notes:

• All inflation figures reflect March 2025 unless stated otherwise.
• Food inflation driven by maize, rice, bean prices, and logistical issues from rains.
• Energy inflation driven by petroleum and wood charcoal price hikes.
• Source refer to the April 2025 Monthly Economic Review.

Global inflation is projected to moderate to 3.5% in 2024, with a further decline to 2.8% by 2026, aligning with central bank targets. However, inflation remains elevated, especially in Emerging Market and Developing Economies (EMDEs), where it is expected to reach 4.0% in 2024 before easing to 3.5% by 2026. Persistent inflationary pressures are driven by high energy and food prices, geopolitical tensions, and supply chain disruptions. Core inflation, particularly in the services sector, remains stubborn, requiring cautious global monetary policies, with interest rates projected to stay elevated through 2026.

1. Global Inflation Trends

• Global inflation is expected to moderate gradually, with an average of 3.5% in 2024, down from the high levels seen during the COVID-19 pandemic recovery. However, this pace of disinflation is slower than previously anticipated​.
• By 2026, global inflation is projected to stabilize around 2.8%, which is broadly consistent with central bank targets​.

2. Regional Inflation Dynamics

• Advanced Economies: Inflation in advanced economies is expected to decline gradually but will remain above pre-pandemic levels for some time. Central banks are likely to continue cautious monetary policies.
  • In the United States, inflation is expected to ease but remain slightly elevated, especially in the services sector.
  • The Euro Area is experiencing a slower inflation decline due to higher energy and food prices​.
• Emerging Market and Developing Economies (EMDEs): Inflation in EMDEs is projected to slow down, but persistent price pressures, particularly in food and energy, will keep inflation higher than desired.
  • EMDEs will see inflation converge toward 4.0% in 2024 and 3.5% by 2026​.
  • In Sub-Saharan Africa, inflation is expected to remain higher due to commodity price volatility and supply constraints​.

3. Core Inflation

• Core inflation (which excludes volatile items like food and energy) remains stubbornly high in many economies, driven by strong growth in services prices. This is particularly true in the United States and other advanced economies​.
• Service sector inflation is slower to recede because of ongoing wage pressures and sticky prices in areas like housing and healthcare​.

4. Factors Contributing to Persistent Inflation

• Geopolitical tensions and supply chain disruptions continue to create price volatility, especially in commodities like oil and gas.
• High energy prices have put upward pressure on inflation, although energy prices are expected to stabilize gradually​.
• Food inflation remains a concern, especially in developing economies. Fluctuations in global grain supplies and climate-related disruptions contribute to price spikes​.

5. Commodity Prices and Inflation

• Oil prices are projected to remain slightly elevated in 2024, averaging $84 per barrel, contributing to inflationary pressures in energy-dependent regions​.
• Agricultural prices, including food commodities, are expected to stabilize, but ongoing supply chain issues and climate disruptions could trigger temporary inflationary spikes​.

6. Monetary Policy and Inflation Control

• Central banks in both advanced and developing economies are expected to remain cautious about easing monetary policies due to persistent inflationary pressures.
  • Interest rates are expected to stay elevated for an extended period. Global policy rates are forecast to average around 4% through 2026, which is double the average of the previous two decades​.
• EMDEs face the challenge of balancing inflation control with supporting economic growth. Inflation targeting and careful monetary policy management remain crucial​.

7. Risks to Inflation

• There is a risk that inflation may persist longer than expected due to several factors:
  • Geopolitical tensions could lead to further supply disruptions, especially in energy markets.
  • Trade fragmentation and rising protectionism could lead to price increases for goods.
  • Climate-related natural disasters could disrupt food production, leading to spikes in food prices​.

Key Figures:

• Global inflation: Expected at 3.5% in 2024, moderating to 2.8% by 2026​.
• Advanced economies: Expected inflation is lower but will stabilize around 2.5% by 2026​.
• EMDEs: Inflation projected at 4.0% in 2024, gradually declining to 3.5% by 2026​.
• Oil prices: Forecast to average $84 per barrel in 2024, impacting energy-dependent economies​.

Summary:

• Global inflation is moderating but remains elevated, particularly in emerging markets and developing economies.
• Inflation pressures from energy and food prices are expected to ease gradually, but geopolitical risks and supply disruptions could trigger temporary inflationary spikes.
• Core inflation, particularly in services, remains persistent, necessitating cautious monetary policies by central banks globally.

Source: The Global Economic Prospects June 2024 report