In September 2025, Tanzania’s macroeconomic environment remained exceptionally stable, marked by a stronger shilling and low, well-anchored inflation. The exchange rate averaged TZS 2,471.69 per USD, appreciating by 0.75% month-on-month and 9.4% year-on-year—an impressive reversal from the sharp depreciation recorded in 2024. This stability was supported by strong export inflows from gold, cereals, and cashew nuts, alongside robust tourism earnings and targeted Bank of Tanzania interventions. Inflation held steady at 3.4%, well within the 3–5% target range and aligned with regional convergence criteria. Food inflation remained elevated at 7%, but non-food (1.9%) and energy inflation (3.7%) stayed subdued, helped by lower global oil prices and a strong currency. Together, these elements created a stable price environment, improving import affordability, reducing cost pressures for households and businesses, and enhancing the effectiveness of monetary policy transmission.

1. Tanzania Shilling Stability (September 2025)

The Tanzania shilling remained relatively strong and stable in 2025.

Key Figures

• Average exchange rate: TZS 2,471.69 per USD
• Previous month (August 2025): TZS 2,490.16
• Monthly appreciation: ≈ 0.75%
• Annual appreciation: 9.4%, compared to 7.6% in August 2025
  (in contrast to 10.1% depreciation in 2024)

Drivers of Shilling Strength

• Strong export inflows (gold, cereals, cashew nuts)
• Robust tourism earnings
• BOT FX market intervention (USD 11 million net sale)
• Stabilized inflation and monetary policy

2. Tanzania Inflation Evolution (2025)

Inflation remained low, stable, and within official target range.

Inflation Figures

• Headline inflation (Sep 2025): 3.4%
• Same as August 2025: 3.4%
• Target range: 3%–5%
• EAC convergence criterion: ≤ 8%
• SADC target: 3%–7%

Components

• Food inflation: 7.0%
• Non-food inflation: 1.9%
• Core inflation: 2.2%
• Energy/fuel/utilities: 3.7% (down from 11.5% in 2024 due to falling global oil prices)

3. How Shilling Stability Relates to Inflation

When the shilling is stable/strong:

1. Imported inflation falls
   • Strong shilling lowers cost of fuel, machinery, medicine, food imports.
2. Fuel prices decline
   • Domestic petrol and diesel prices dropped in 2025
     (aligned with lower global oil prices).
3. Lower cost of tradable goods
   • Stabilizes prices in urban markets (transport, household items).
4. Reduced expectations of inflation
   • Businesses experience predictable import costs.
   • Consumers face steady price trends.
5. Monetary policy becomes more effective
   • Interbank rates (6.45%) stay within policy corridor, supporting price stability.

Summary Table: Shilling Stability vs Inflation (September 2025)

Implications of Shilling Stability and Its Link to Inflation in September 2025

The interplay between the Tanzanian shilling's strength and low inflation in September 2025, as detailed in Sections 2.5 (Financial Markets, specifically the Interbank Foreign Exchange Market) and 2.2 (Inflation Developments) of the Bank of Tanzania's (BOT) Monthly Economic Review (October 2025), underscores a virtuous cycle of external resilience and price stability. The shilling appreciated 0.75% monthly (average TZS 2,471.69/USD vs. TZS 2,490.16 in August) and 9.4% annually—reversing the 10.1% depreciation seen in September 2024—amid robust export inflows (gold, cash crops, cashews), tourism earnings, and BOT's targeted intervention (net USD 11 million sale; Chart 2.5.3). This stability dovetails with headline inflation holding at 3.4% (within 3–5% target and EAC/SADC criteria), driven down by easing food (7.0%) and energy (3.7%) pressures. Below, I outline the implications, integrating broader economic dynamics like 6.3% Q2 GDP growth and accommodative policy (CBR 5.75%).

1. Shilling Appreciation: Bolstering External Buffers and Import Affordability

• Monthly/Annual Gains (0.75% and 9.4%): These reflect ample FX liquidity in the IFEM (USD 93.8 million transactions, down slightly from USD 101.5 million in August but with banks handling 88.3%), fueled by export surges in gold (elevated prices) and non-traditional items like cereals/cashews . Tourism's rebound (post-global recovery; aligned with IMF's 3.2% 2025 growth outlook) added inflows, while BOT's intervention curbed volatility without depleting reserves.
• Reversal from 2024 Depreciation: The shift from -10.1% y/y signals improved current account dynamics (e.g., trade surplus from commodities; mixed prices but oil decline aiding imports). This reduces pass-through to domestic prices, as a stronger shilling lowers USD-denominated costs (e.g., fuel imports down, mirroring global oil drop).
• Broader Implications:
  • Positive: Enhances policy space for monetary easing (interbank rate at 6.45%, within 3.75–7.75% corridor), supporting 16.1% private credit growth and 20.8% M3 expansion. Boosts investor confidence, evident in oversubscribed long-term bonds.
  • Risks: Over-reliance on gold/tourism exposes to global shocks (e.g., protectionism; Charts 1.1a/b). If exports soften (e.g., weather-hit coffee), reserves could pressure the rate, though current levels (implied adequacy) provide a buffer.

2. Inflation Stability: Reinforced by Currency Strength and Supply Factors

• Headline at 3.4% (Unchanged; Core 2.2%, Food 7.0%, Energy 3.7%): Stability stems from shilling-driven import cost relief (e.g., energy inflation halved from 11.5% y/y 2024 via cheaper oil/fuel) offsetting core upticks (household/transport). Food easing (from 7.7% in August) reflects NFRA stocks at 570,519 tonnes (up via 39,590-tonne purchases) and wholesale declines in staples (sorghum/potatoes), though rice/maize rose on regional demand.
• Non-Food at 1.9%: Highlights shilling's role in curbing imported inflation (fuel/machinery/medicine), aligning with global moderation (4.2% projected) and EAC/SADC cooling.
• Broader Implications:
  • Positive: Predictable costs foster business investment (e.g., in agriculture/mining, 1.8%/1.5% GDP contributions) and consumer confidence, aiding 6% full-year growth projection. Real rates remain positive (e.g., deposits ~6.4% real vs. 3.4% inflation), encouraging savings amid liquidity surplus.
  • Risks: Food's 7.0% (higher than headline) signals vulnerability to supply shocks (e.g., border demand or droughts). Global oil rebound could reverse energy gains, though shilling buffer mitigates.

3. Interlinkages: Shilling Strength Amplifying Monetary Effectiveness and Growth

• Reduced Imported Inflation and Expectations: Stronger shilling (9.4% y/y) directly lowers tradable goods costs (transport/utilities), stabilizing urban prices and anchoring inflation expectations—key for BOT's neutral stance. This synergy with adequate food/power supply (enabling 6.3% GDP) creates a low-volatility environment.
• Policy Transmission: Stable FX supports interbank easing (6.45% from 6.48%), with reverse repos managing liquidity, preventing spillovers to lending rates (15.18% overall; prior analysis).
• Broader Implications:
  • Positive: Aligns with fiscal prudence (August deficit financed sustainably; Section 2.6) and debt stability (total USD 50.8B, 69.8% external), enhancing external resilience (e.g., disbursements USD 443M vs. service USD 131M). In Zanzibar, similar dynamics likely aid tourism-led recovery.
  • Risks: Currency overvaluation could erode export competitiveness if sustained, though annual gains counter 2024 weakness. Monitor global uncertainties (e.g., US rate cuts weakening USD).

4. Macroeconomic and Policy Context from the Review

• Synergies Across Sections: Shilling/inflation stability complements robust output (agriculture/mining-led; Section 2.1), financial market depth (T-bill/bond oversubscription), and external debt management (multilateral dominance at 57%). Projections: Inflation 3–5%, growth 6%, with policy vigilance on commodities (oil down, gold up).
• Outlook: Continued export/tourism inflows could sustain appreciation, but diversification (e.g., manufacturing) is key. BOT's FX policy ensures balance, supporting EAC integration.

In summary, the shilling's September 2025 strength implies fortified macroeconomic stability, directly muting inflation risks and enabling growth-focused policies. This tandem—rooted in exports, interventions, and supply adequacy—positions Tanzania resiliently, though vigilance on commodity volatility and food chains is essential for 2026 continuity.

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.

Tanzania’s economic performance in March 2025, as detailed in the April 2025 Monthly Economic Review, shows both alignment and divergence with global economic trends. Below, we compare Tanzania’s inflation, growth outlook, and commodity market influences with global forecasts, using specific figures to illustrate the relationship.

Inflation Trends

Global Trend: The IMF forecasts global inflation at 4.3% for 2025, declining to 3.6% in 2026, reflecting a slower-than-expected easing due to trade tensions and persistent pressures in advanced economies. Inflation is decreasing but remains above pre-pandemic levels in many countries.

Tanzania’s Performance: Tanzania’s headline inflation was 3.3% in March 2025, up from 3.0% in March 2024, driven by food (5.4%) and energy, fuel, and utilities (7.9%) price increases (Pages 3, 4, 5). Core inflation, excluding volatile items, fell to 2.2% from 3.9%.

Tanzania’s inflation is lower than the global forecast of 4.3%, aligning with the global trend of declining inflation. However, its food and energy-driven inflation spike mirrors global pressures from supply constraints and trade disruptions. Tanzania’s inflation remains within national and regional (EAC and SADC) targets, indicating stronger control compared to some advanced economies facing persistent pressures.

Economic Growth Outlook

Global Trend: The IMF revised global growth downward to 2.8% for 2025 and 3.0% for 2026, from 3.3% for both years, due to trade tensions, unpredictable policies, and diminishing fiscal buffers. Risks include climate change and limited fiscal space in developing economies.

Tanzania’s Performance: The document does not provide a specific GDP growth rate for Tanzania in 2025 but notes that monetary policy supports economic growth while maintaining inflation below 5%. Domestic challenges include rising food and energy prices and logistical issues from seasonal rains.

Tanzania faces similar downside risks as the global economy, such as trade tensions and climate-related disruptions (e.g., heavy rains impacting food transport). However, its stable monetary policy (Central Bank Rate at 6%) and adequate liquidity suggest resilience compared to developing economies with limited fiscal space. Tanzania’s growth is likely moderated but supported by prudent policies, aligning with the global trend of cautious optimism.

Commodity Market Influences

Global Trend: Commodity markets show divergent trends:

• Gold prices rose 3% to USD 2,983.25 per ounce due to safe-haven demand.
• Fertilizer prices increased 2% to USD 615.13 per tonne due to supply constraints.
• Palm oil prices edged up 0.2% to USD 1,069 per tonne on Asian demand.
• Crude oil prices fell 4% to USD 70.70 per barrel due to oversupply.
• Coffee and sugar prices dropped 2% and 1.5%, respectively, due to improved production.

Tanzania’s Performance: Tanzania, a commodity-dependent economy, is impacted by these trends:

• Gold: Rising gold prices benefit Tanzania’s export revenues, as gold is a major export.
• Fertilizer: Higher fertilizer prices increase agricultural input costs, potentially raising food prices (e.g., maize, rice, beans), contributing to 5.4% food inflation.
• Palm Oil: Stable palm oil prices support Tanzania’s edible oil sector, aligning with robust Asian demand.
• Crude Oil: Lower oil prices reduce Tanzania’s import bill, easing pressure on energy inflation (7.9%) despite domestic petroleum price hikes.
• Coffee and Sugar: Declining coffee and sugar prices may reduce export earnings, impacting trade balance.

Tanzania’s economy is closely tied to global commodity price movements. Positive trends (gold, palm oil) bolster exports, while negative trends (fertilizer, coffee, sugar) pose challenges. The drop in crude oil prices provides relief, aligning with global oversupply benefits, but domestic supply chain issues amplify food price pressures, diverging from global commodity price declines in some sectors.

Policy and Structural Considerations

Global Trend: The global economic outlook is tilted downward due to trade tensions, unpredictable policies, and climate change, particularly affecting developing economies with limited fiscal buffers.

Tanzania’s Performance: Tanzania’s monetary policy remains stable, with the Bank of Tanzania maintaining the Central Bank Rate at 6% and ensuring liquidity through interbank rate management (Page 5). The National Food Reserve Agency’s release of 32,598 tonnes of maize and paddy mitigated food inflation (Page 4). However, logistical challenges and climate-related rains increase costs.

Tanzania’s proactive policies align with global efforts to stabilize economies amid uncertainties. Its food reserve strategy counters global supply chain disruptions, and monetary stability mitigates trade tension impacts. However, climate change (seasonal rains) and limited fiscal space, common in developing economies, pose shared challenges.

Conclusion

Tanzania’s economic performance in March 2025 aligns with global trends in declining inflation (3.3% vs. 4.3% globally) and cautious growth outlooks, supported by stable monetary policy and commodity export strengths (e.g., gold). However, it faces unique pressures from food (5.4%) and energy (7.9%) inflation, driven by domestic logistical issues and global commodity price hikes (e.g., fertilizer). While global risks like trade tensions and climate change affect Tanzania, its prudent policies and food reserves provide resilience, positioning it favorably among developing economies.

Key Economic Indicators: Tanzania vs. Global Trends (March 2025)

Notes:

• Tanzania’s data reflects March 2025 unless stated otherwise.
• Global figures are IMF forecasts or commodity price changes for March 2025.
• Source pages refer to the April 2025 Monthly Economic Review.