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.

Tanzania recorded a 2.5% increase in food prices in October 2024, significantly lower than the East African average and well below high-inflation countries like Kenya (4.3%) and Burundi (22.5%). This marks a notable achievement compared to its historical average of 7.79% (2010–2024). Projections indicate further declines to 1.4% in 2025 and 1.1% in 2026, underscoring Tanzania's agricultural resilience and effective economic policies. In a continent where food inflation can reach extremes like Zimbabwe’s 105%, Tanzania stands out as a model for regional food price stability.

• October 2024: Food inflation increased by 2.5% year-over-year.
• Historical Context: Averaged 7.79% (2010–2024), with a peak of 27.84% (January 2012) and a record low of 0.10% (March 2019).
• Short-Term Forecast: Predicted to decline to 2.20% by Q4 2024.
• Long-Term Projection: Expected to decrease further, reaching 1.40% in 2025 and 1.10% in 2026.

Position in East Africa

Among East African countries, Tanzania exhibits relatively low food inflation, significantly outperforming nations like Kenya (4.3%) and Burundi (22.5%):

• Rwanda: -5.8% (deflation)
• Uganda: -2.1% (deflation)
• Tanzania: 2.5%
• Kenya: 4.3%
• Burundi: 22.5%

Tanzania's stability in food inflation reflects effective supply chain management, moderate climate impacts, and improved food production efforts.

Position in Africa

In a broader African context, Tanzania's 2.5% food inflation is below the regional average, where some countries experience double-digit inflation:

• High Inflation Countries: Zimbabwe (105%), Malawi (43.5%), South Sudan (96.4%), and Nigeria (39.16%).
• Low Inflation Countries: Rwanda (-5.8%), Seychelles (-0.2%), and Morocco (0.3%).
• Median Range: Countries like South Africa (3.6%) and Mauritius (8.4%) fall between the extremes.

Key Observations

• Regional Position: Tanzania's food inflation rate is lower than most East African and African nations, highlighting relative economic and agricultural stability.
• Global Context: While Africa faces challenges like climate change and economic shocks, Tanzania’s projections for declining food inflation are notable in the face of global food supply disruptions.

Opportunities for Tanzania

• Enhancing Food Security: Continued investment in agriculture and infrastructure could stabilize inflation further.
• Regional Leadership: With stable food prices, Tanzania could lead East Africa in food exports, aiding neighbors with high inflation.

Insights from Tanzania's Food Inflation and Comparative Data

1. Economic Stability in Tanzania
   • Low food inflation (2.5%) compared to regional and continental peers indicates price stability in essential commodities.
   • Reflects resilience in food supply chains, stable production, and moderate external pressures, such as global commodity price fluctuations.
2. East Africa Advantage
   • Tanzania outperforms key regional players like Kenya (4.3%) and Burundi (22.5%), suggesting that the country is effectively managing factors like climate risks and import dependencies.
   • The negative inflation in Rwanda (-5.8%) and Uganda (-2.1%), although better, may signify deflation or suppressed demand, which could indicate potential economic slowdowns.
3. Africa-Wide Comparison
   • Tanzania's inflation trends align more with stable economies like Mauritania (1.6%) and Cape Verde (2.4%), rather than volatile nations like Nigeria (39.16%) or Zimbabwe (105%).
   • This positions Tanzania as a relatively stable market within the African food sector.
4. Positive Outlook
   • Projected declines in food inflation to 1.4% (2025) and 1.1% (2026) indicate strong economic policy frameworks and growth in agricultural productivity.
   • This stability provides an opportunity for Tanzania to attract investment in agri-business and position itself as a regional food supplier.
5. Challenges and Caution
   • While inflation is low, Tanzania must maintain focus on:
     • Weather impacts: East Africa remains prone to droughts and floods.
     • Global pressures: Rising global oil prices could indirectly affect food costs.
     • Demand management: Ensuring food inflation reflects healthy demand, not oversupply or stagnation.
6. Broader Implications
   • For households: Low inflation means affordable food, reducing pressure on low-income families.
   • For investors: A stable inflation environment signals reduced risks for agricultural investments.
   • For policymakers: A need to ensure inflation reductions are sustainable, balancing supply and demand without undercutting farmer earnings.

Conclusion

Tanzania's food inflation trends suggest economic stability, policy effectiveness, and potential for growth in the agricultural sector. It also positions the country as a leader in regional food security, capable of influencing East Africa's economic trajectory.