National Consumer Price Index (NCPI) - Food & Non-Alcoholic Beverages

Report Period: 2021-2025 (Historical) | 2026 (Forecast)
Base Year: 2020 = 100
Weight in Consumer Basket: 28.2%
Date Prepared: December 2025

Lead Analyst: Amran Bhuzohera

Tanzania’s food inflation landscape has undergone significant fluctuations over the past five years, shaped by global shocks, domestic supply constraints, and structural market inefficiencies. Between 2021 and 2025, food inflation averaged 5.2%, but the trend reveals pronounced volatility—rising from 3.7% in 2021 to a crisis peak of 7.3% in 2022, driven largely by fuel cost surges (energy inflation averaged 9.1% in 2022) and supply chain disruptions. Although 2024 marked a period of exceptional stability with food inflation dropping to 2.1%, households have since faced renewed pressure in 2025 as inflation accelerated sharply to an average of 6.0%. This rise reflects persistent cost-push factors, including elevated transport index levels that climbed from 103.34 (2021) to 121.50 (2025)—a cumulative increase of 17.6%, directly increasing food distribution expenses.

By November 2025, food inflation reached 6.6%, nearly double the national headline inflation of 3.4%, underscoring the disproportionate burden food prices impose on household purchasing power. Food prices have risen cumulatively by 31.5% since the 2020 base year, intensifying affordability challenges, particularly for low-income urban households and regions dependent on purchased food. Unprocessed and food crop categories—which are highly weather-sensitive—remain the most volatile, with swings as wide as 10.2 percentage points between June 2024 (-1.3%) and July 2025 (8.9%). This volatility reflects structural weaknesses such as low agricultural mechanization, post-harvest losses, long supply chains, and limited storage facilities.

Looking ahead, the 2026 forecast indicates continued upward pressure, with food inflation expected to average 7.1%, peaking at 8.5% in July, driven by seasonal supply shortages, lean-season stress, and higher input costs. Critical food categories such as food crops and unprocessed food are projected to hit peaks of 11.0% and 11.5%, respectively. With Tanzania’s population and urbanization steadily growing, combined with elevated energy and transport costs projected to rise to 6.5–8.0% in 2026, food price stability remains a central macroeconomic concern. Close monitoring and policy interventions—particularly in agricultural productivity, logistics, and market efficiency—will be essential to mitigate risks and sustain household welfare. Read More: Tanzania’s Inflation Path in 2025

Key Highlights

• Food prices have risen cumulatively by 31.5% since 2020, significantly reducing household purchasing power and widening the gap between food inflation (6.6%) and overall inflation (3.4%) as of November 2025.
• 2024 was the most stable year with only 2.1% food inflation, but this reversed sharply in 2025, where food inflation averaged ~6.0%, marking a 3.9 percentage-point surge from the previous year.
• 2022 remains the crisis year, with food inflation peaking at 9.7%, unprocessed food at 12.7%, and food crops at 14.2%, driven by high fuel costs and supply chain disturbances.
• Unprocessed and food crop categories remain the most volatile, showing swings of up to 10.2 percentage points between 2024 and 2025 due to climate variability, seasonal shortages, and production instability.
• 2026 food inflation is forecasted to average 7.1%, with a seasonal high of 8.5% in July, reflecting continued pressure from input costs, transport inflation, and recurring supply-side constraints.

1. HISTORICAL ANALYSIS (2021-2025)

1.1 Five-Year Trend Overview

Key Observation: The data reveals a cyclical pattern with a major spike in 2022, gradual decline through 2023-2024, and a sharp rebound in 2025.

1.2 Food Price Index Evolution

The table below shows how food prices have increased relative to the 2020 base year:

Analysis: Food prices have increased by 31.5% cumulatively since the 2020 base year, representing significant erosion of purchasing power for households.

1.3 Crisis Period Analysis - 2022

The year 2022 represented the peak of food inflation pressure:

Impact: The 2022 crisis saw double-digit inflation in key food categories, severely impacting household budgets and food security.

1.4 Recovery Period - 2023-2024

2023 - Gradual Stabilization:

• Started at 9.7% (January) - carryover from 2022 crisis
• Ended at 2.3% (December) - significant improvement
• Annual average: 6.8%
• Pattern: Steady monthly decline throughout the year

2024 - Exceptional Stability:

• Annual average: 2.1% - the lowest in the five-year period
• Monthly range: 0.9% (June) to 4.6% (December)
• Food crops showed negative inflation (-0.4%) - actual price decreases
• This period represented optimal conditions for food affordability

1.5 Current Situation - 2025

Monthly Inflation Rates - 2025:

Key Characteristics:

• Consistency: All months above 5% - no relief periods
• Peak Period: June-August showing 7.3-7.7%
• Acceleration: Sharp increase from 2024's 2.1% to current 6.0%
• Pattern: Mid-year peaks align with seasonal agricultural cycles

2. CATEGORY BREAKDOWN ANALYSIS

2.1 Food Categories Performance

2.2 Most Volatile Components

Unprocessed Food - 2024-2025 Volatility:

Food Crops Index - Monthly Pattern:

Insight: Food crops show extreme seasonal and year-to-year variations, making them the primary driver of overall food inflation volatility.

2.3 Comparison with Overall Inflation

Critical Finding: Food inflation is running at nearly DOUBLE the overall inflation rate, indicating specific supply-side pressures in the food sector.

3. UNDERLYING FACTORS & CHALLENGES

3.1 Cost-Push Factors

Energy & Fuel Impact:

Transport Costs:

Impact: Rising energy and transport costs directly increase food distribution expenses, passed on to consumers.

3.2 Supply-Side Challenges

Agricultural Production Instability:

1. Climate Dependency: Sharp swings in unprocessed food prices correlate with seasonal rainfall patterns
2. Post-Harvest Losses: Infrastructure gaps lead to wastage and supply constraints
3. Input Costs: Fertilizer and seed prices remain elevated
4. Technology Gap: Low mechanization affects productivity

Market Structure Issues:

1. Long Supply Chains: Multiple intermediaries increase final prices
2. Storage Deficits: Limited cold storage and warehousing
3. Market Information: Price transparency gaps benefit middlemen
4. Infrastructure: Poor rural roads increase transport costs

3.3 Demand-Side Factors

4. IDENTIFIED PROBLEMS & RISKS

4.1 Current Critical Issues

5. 2026 FORECAST - DETAILED PROJECTIONS

5.1 Base Case Monthly Forecast - 2026

Detailed Monthly Projections:

Quarterly Summary:

5.2 Category-Specific Forecasts

Food Categories - 2026 Projections:

Other Influential Categories:

Tanzania's food and non-alcoholic beverages inflation rose to 7.7% in August 2025, up from 7.6% in July, reflecting a year-on-year price increase in this category, which holds the largest CPI weight of 28.2%. The food index climbed from 121.12 in August 2024 to 130.48 in August 2025, though it remained nearly flat month-to-month (130.47 to 130.48), buoyed by price drops in staples like maize (-1.9%) and vegetables (-1.8%). This stability masks underlying pressures from agricultural supply challenges, impacting 25-30% of GDP and threatening household affordability, especially for the 57% of households citing food costs as a major concern in 2024.

Food and Non-Alcoholic Beverages Inflation

• Weight in CPI basket: 28.2% (largest share).
• Annual inflation (Aug 2025 vs Aug 2024): 7.7%, compared to 7.6% in July 2025.
• Index values:
  • Aug 2024: 121.12
  • July 2025: 130.47
  • Aug 2025: 130.48

This means that on average, the prices of food and non-alcoholic beverages increased by 7.7% over the year.

Food Items Driving the Change (July → August 2025)

Even though annual food inflation was high, the monthly food index was almost flat (0.0%), because prices of some items went down, offsetting increases in others.
Items that recorded price decreases include:

• Maize grains: -1.9%
• Maize flour: -0.3%
• Wheat grains: -1.1%
• Finger millet grains: -0.5%
• Fresh fish: -0.3%
• Vegetables: -1.8%
• Irish potatoes: -2.7%
• Sweet potatoes: -3.3%
• Cocoyams: -2.8%
• Dried beans: -2.5%
• Dried lentils: -4.5%
• Dried peas: -2.5%
• Cowpeas: -3.4%
• Groundnuts: -0.2%

These declines helped stabilize the monthly food inflation despite strong annual growth.

Key Insights

1. Food is the main inflation driver: At 7.7%, food inflation is more than double the headline inflation (3.4%).
2. Monthly stability: The food index hardly changed from July to August 2025 (130.47 → 130.48) due to falling prices of several staples.
3. Volatility: The year-on-year rise shows that food prices have been under upward pressure over the past 12 months, even if short-term prices softened in August.

Summary:
Food and non-alcoholic beverages in Tanzania saw 7.7% annual inflation in August 2025, driven mainly by higher year-on-year food costs. However, month-to-month food prices were stable, with declines in staple grains, vegetables, and pulses balancing out other pressures.

Table 1: Food and Non-Alcoholic Beverages Inflation Rate

*Note: July 2025 food inflation rate (7.6%) is mentioned in the text as comparison to August 2025 rate.

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

Economic Implications of Food Inflation in Tanzania (August 2025)

In August 2025, Tanzania's food and non-alcoholic beverages inflation reached 7.7%, more than double the headline rate of 3.4%, driven by a year-on-year index rise from 121.12 to 130.48 despite monthly stability (0.0% change from July's 130.47). This category's dominant 28.2% CPI weight amplifies its role in eroding household purchasing power, particularly amid projections of 4.0% overall inflation and 6.0% GDP growth, highlighting vulnerabilities in agriculture and potential poverty exacerbation for low-income groups.

Impact on Households and Poverty

Food inflation disproportionately affects low-income and rural households in Tanzania, where food expenditures can exceed 50% of budgets, compared to the national CPI weight of 28.2%. The 7.7% annual rise in August 2025, up from 7.6% in July and 7.3% in June, intensifies cost-of-living pressures, potentially pushing more households into poverty. In 2024, 57% of households reported food price hikes as a major shock, contributing to intersecting crises like hunger and economic instability. Globally, a 1% food price increase can raise poverty by 0.0001% in low- to middle-income groups, a trend applicable to Tanzania where urban poverty is exacerbated by reduced welfare and access to nutritious food. However, long-term spikes may benefit net food producers, though short-term volatility from weather and supply issues hinders this for subsistence farmers.

Macroeconomic Effects

As the primary inflation driver, food prices at 7.7% in August 2025 elevate the non-core index to 7.3%, contrasting with core inflation's stability at 2.0% (excluding volatiles like unprocessed food). This contributes to headline inflation's slight rise to 3.4%, within the Bank of Tanzania's (BOT) 3-5% target, but risks broader price instability if unchecked. Agriculture, comprising 25-30% of GDP, faces disruptions from weather-induced supply shortages, amplifying import dependencies and exchange rate pressures (USD/TZS around 2,470). Despite this, Tanzania's 6.0% GDP growth projection for 2025 remains robust, supported by mining and services, though persistent food hikes could dampen consumption and widen inequality.

Agricultural Sector Challenges

Monthly price declines in staples like maize (-1.9%), vegetables (-1.8%), and tubers (e.g., sweet potatoes -3.3%) provided short-term relief in August 2025, but year-on-year pressures stem from supply disruptions, including weather events and global commodity trends (FAO index up 7.6% annually). These factors, combined with rising input costs, challenge Tanzania's food security recovery post-pandemic, where agriculture employs over 65% of the workforce. Easing global prices offer some buffer, but domestic volatility could hinder export competitiveness and stock buffers (e.g., 557k tonnes noted earlier in 2025).

Policy Responses and Outlook

BOT's cautious accommodative policy for 2025/26, maintaining low rates to anchor inflation while supporting growth, addresses food-driven pressures through liquidity management and reserves (USD 6 billion). Recommendations include agricultural subsidies and infrastructure to mitigate supply shocks. IMF projections of 4.0% inflation suggest moderation, but sustained food hikes risk derailing 6.0% growth, necessitating targeted interventions for inclusive development.

In June 2025, Tanzania’s headline inflation rate stood at 3.3%, a slight increase from 3.2% in May 2025, remaining within the government’s 3–5% target and aligned with SADC/EAC benchmarks. However, the sharp rise in food inflation to 5.6% in May 2025, driven by supply chain disruptions and price spikes in staples like rice (2.5%), maize flour (0.8%), and cassava (4.2%), significantly impacts the cost of living, particularly for low-income households reliant on these goods. While energy and utilities inflation eased to 6.1% from 7.3% a year earlier, housing costs (7.2% annual increase) and non-food items like charcoal (1.5%) continue to strain budgets. With approximately 26% of Tanzanians living below the poverty line and 80% in the informal sector, these price pressures could exacerbate poverty, fuel wage demands, and challenge economic stability, despite a stable core inflation rate of 1.9%.

Key Inflation Metrics (June 2025)

• Headline Inflation: The annual headline inflation rate for June 2025 is 3.3%, slightly up from 3.2% in May 2025, but within the Tanzanian government's target range of 3–5% and aligned with Southern African Development Community (SADC) and East African Community (EAC) benchmarks. This indicates relative macroeconomic stability.
• Core Inflation: Excluding volatile items like unprocessed food and energy, core inflation decreased to 1.9% in June 2025 from 2.1% in May 2025, reflecting stable prices for non-volatile goods and services.
• Food Inflation: Food and non-alcoholic beverages, which constitute 28.2% of the NCPI basket, saw a 3.5% annual price increase in June 2025, up from a 0.7% monthly rise. Specific food items driving this include rice (2.5%), sorghum grains (1.2%), finger millet grains (7.0%), maize flour (0.8%), cooking bananas (3.9%), and dry cassava (4.2%). Food inflation has risen sharply from 1.6% in May 2024 to 5.6% in May 2025, primarily due to transportation disruptions and supply chain challenges.
• Energy, Fuel, and Utilities: Inflation in this sector decreased from 7.3% in May 2024 to 6.1% in May 2025, reflecting a decline in global oil prices. However, items like charcoal (1.5%) and diesel (0.7%) still saw monthly price increases in June 2025.
• Non-Food Items: Price increases in non-food items, such as garments for men and children (0.2–0.3%), footwear for children (0.3%), household furniture (0.4%), and laptop computers (0.6%), contributed to the overall NCPI rise from 119.85 in May 2025 to 120.18 in June 2025 (a 0.3% monthly increase).

Impact on Cost of Living

1. Food Price Pressures:
   • Food and non-alcoholic beverages, with a significant weight of 28.2% in the NCPI, are a major driver of the cost of living, especially for low-income households who allocate a large share of their budgets to food. The 5.6% food inflation rate in May 2025, coupled with specific increases in staples like rice, maize, and cassava, directly raises household expenses.
   • For example, a 7.0% rise in finger millet grains and 4.2% in dry cassava disproportionately affects rural and low-income households reliant on these staples. This could lead to reduced purchasing power and potential shifts to lower-quality or less nutritious food options, exacerbating food insecurity.
2. Non-Food and Energy Costs:
   • While energy inflation has moderated to 6.1%, the rise in charcoal and diesel prices still impacts household budgets, particularly for cooking and transportation. Urban households, reliant on purchased fuels, feel this pinch more acutely.
   • Non-food items like clothing, footwear, and household goods saw modest increases (e.g., 0.2–0.4%), which cumulatively add to living costs, especially for families with children or those maintaining homes.
3. Housing and Utilities:
   • The housing, water, electricity, gas, and other fuels category, with an 18% weight in the NCPI, recorded a 0.4% monthly decrease but a 7.2% annual increase. Rising rental costs (0.3%) and maintenance materials (0.2%) contribute to higher living expenses, particularly in urban areas like Dar es Salaam.

Impact on Poverty Levels

• Increased Poverty Risk: The sharp rise in food inflation (5.6%) outpaces headline inflation (3.3%), disproportionately affecting low-income households. According to the World Bank, approximately 26% of Tanzanians lived below the international poverty line ($2.15/day, 2017 PPP) in recent estimates. Higher food prices could push more households into poverty, particularly in rural areas where agriculture is a primary livelihood but supply disruptions increase costs.
• Nutritional Impact: Price spikes in staples like maize and rice may force households to reduce consumption or switch to less nutritious alternatives, potentially worsening malnutrition rates, especially among children. Tanzania’s 2022 Demographic and Health Survey reported 30% of children under five are stunted, and rising food costs could aggravate this.

Influence on Wage Demands

• Pressure for Higher Wages: The rising cost of living, driven by food and non-food price increases, is likely to spur demands for wage adjustments, particularly in urban areas and formal sectors. Public sector workers and trade unions may push for salary hikes to match the 3.3% headline inflation rate or the higher 5.6% food inflation rate.
• Informal Sector Challenges: Over 80% of Tanzania’s workforce is in the informal sector, where income adjustments are less structured. These workers may struggle to cope with rising costs, potentially leading to social unrest or increased reliance on government subsidies.

Economic Stability

• Stable Macroeconomic Environment: The headline inflation rate of 3.3% remains within the government’s 3–5% target and aligns with SADC/EAC benchmarks, signaling relative economic stability. The decline in core inflation to 1.9% further supports this, as it indicates controlled price growth in non-volatile sectors.
• External Factors: Easing global oil prices have reduced energy inflation, providing some relief to transport and production costs. However, transportation disruptions (e.g., weather-related issues or infrastructure bottlenecks) have driven food inflation, highlighting vulnerabilities in domestic supply chains.
• Policy Implications: The Bank of Tanzania is likely to maintain a cautious monetary policy to keep inflation within the target range. However, persistent food price increases may necessitate targeted interventions, such as subsidies for staples or investments in agricultural logistics, to stabilize prices.

Analytical Insights

• Sector-Specific Impacts: Food inflation’s dominance reflects Tanzania’s reliance on agriculture and vulnerability to supply shocks. While energy price relief is positive, the overall cost-of-living increase strains household budgets, particularly for the poor.
• Poverty and Inequality: The disproportionate impact of food inflation on low-income households could widen inequality, as wealthier households are better equipped to absorb price shocks. This may exacerbate urban-rural disparities, given higher urban exposure to non-food costs like rent and fuel.
• Wage Dynamics: Rising costs may fuel labor market tensions, but the informal sector’s dominance limits broad wage adjustments, potentially increasing reliance on social safety nets.
• Long-Term Stability: The stable headline inflation rate and declining core inflation suggest effective macroeconomic management, but addressing food supply chain issues is critical to sustaining this stability.

Conclusion

Inflation in Tanzania, at 3.3% in June 2025, remains manageable but masks sector-specific pressures, particularly in food (5.6%), which significantly impacts the cost of living for low-income households. This could exacerbate poverty and malnutrition risks, especially in rural areas. Wage demands are likely to rise, particularly in formal sectors, but the informal economy’s dominance limits broad relief. While macroeconomic stability is maintained, addressing food supply chain disruptions is critical to mitigating cost-of-living pressures and ensuring long-term economic stability. Targeted policies, such as food subsidies or infrastructure improvements, could alleviate these challenges.

Below is a table presenting the Annual Inflation Rates by Main Groups for June 2025, based on the data from the provided document. The table includes the main groups, their respective weights in the National Consumer Price Index (NCPI), and the 12-month percent change (annual inflation rate) for June 2025.

Notes:

• The 12-Month Percent Change represents the annual inflation rate for each group, calculated as the percentage change in the NCPI from June 2024 to June 2025 (base year: 2020 = 100).
• The Housing, Water, Electricity, Gas, and other group has the highest inflation rate at 7.2%, driven by items like rentals and utilities.
• Information and Communication recorded a 0.0% inflation rate, indicating price stability in this sector.
• The overall All Items Index inflation rate is 3.3%, reflecting a stable macroeconomic environment within Tanzania’s target range of 3–5%.

Below is a table summarizing key figures related to inflation in Tanzania for June 2025, drawn from the provided document and incorporating relevant details from the earlier context. The table focuses on essential metrics to provide a concise overview of inflation, its sectoral impacts, and related economic indicators.

Notes:

• Headline Inflation: The 3.3% rate in June 2025 aligns with SADC/EAC benchmarks, indicating macroeconomic stability.
• Food Inflation: The 5.6% rate (May 2025) and 3.5% for June 2025 reflect supply chain issues, notably transportation disruptions, impacting staples critical to low-income households.
• Core Inflation: The decline to 1.9% suggests stable pricing for non-volatile goods, beneficial for policy planning.
• Economic Context: Rising food and housing costs disproportionately affect low-income households, potentially increasing poverty and malnutrition risks. The informal sector’s dominance complicates wage adjustments, heightening pressure on social safety nets.
• Data Source: Figures are primarily from the provided NCPI document (June 2025), with poverty and stunting rates from external sources (World Bank, Demographic and Health Survey).

This table consolidates critical inflation-related figures to highlight their implications for cost of living and economic stability.