In July 2025, Tanzania's headline inflation rate remained stable at 3.3%, unchanged from June 2025 and well within the Bank of Tanzania's medium-term target range of 3-5%. This stability was driven by offsetting dynamics in the inflation basket: a slight rise in food inflation was counterbalanced by decelerations in non-food components, particularly energy, fuel, and utilities. According to the National Bureau of Statistics and Bank of Tanzania computations, this outcome aligned with regional convergence benchmarks in the East African Community (EAC) and Southern African Development Community (SADC), where inflation trends were mixed but generally moderate.

Key Figures from the Bank of Tanzania Monthly Economic Review (August 2025):

• Headline Inflation: 3.3% (annual rate), stable from the previous month (Headline inflation consistently within the 3-5% target band over recent periods).
• Food and Non-Alcoholic Beverages Inflation: Rose to 7.6% from 7.3% in June 2025, driven by increases in staple prices like rice and finger millet (Annual wholesale price changes, with rice showing upward trends).
• Core Inflation: Unchanged at 1.9%, down from 3.6% in July 2024, reflecting limited pressures in non-volatile categories (Depicts twelve-month inflation trends, with core remaining low).
• Energy, Fuel, and Utilities Inflation: Decelerated to 1.0% from 2.1% in June 2025, attributed to declining wood charcoal and petroleum product prices (Domestic petroleum prices trending downward in line with global oil markets, with petrol, diesel, and kerosene averaging below TZS 3,200 per liter).

This stability contributed to a subdued inflation outlook, enabling supportive monetary policy adjustments.

Influence on Economic Development

Stable inflation fosters economic development by preserving purchasing power, reducing uncertainty for investors and consumers, and allowing central banks to ease monetary policy without risking price spirals. In Tanzania's case, the July 2025 inflation stability directly influenced development through enhanced credit availability, boosted economic activity, and sustained growth momentum. Low and predictable inflation encourages household consumption, business investment, and foreign direct investment, which are critical for Tanzania's transition toward middle-income status.

Direct Impacts from Monetary Policy Adjustments:

The Monetary Policy Committee (MPC) cited the stable inflation environment as a key factor in lowering the Central Bank Rate (CBR) to 5.75% from 6.00% for the quarter ending September 2025. This decision aimed to stimulate credit growth amid strengthening domestic conditions and diminishing global risks. As a result:

• Extended Broad Money Supply (M3) Growth: Accelerated to 19.9% annually in July 2025, up from 18.7% in June 2025 (M3 stock reaching around TZS 50,000 billion, with growth rates climbing steadily).
• Private Sector Credit Growth: Remained strong at 15.9%, consistent with prior months (Though not fully detailed in the provided excerpts, indicates sustained expansion supporting sectors like agriculture and manufacturing).

These figures reflect how inflation stability enabled liquidity injections—such as TZS 758.8 billion in reverse repo operations—to steer interbank rates within the 3.75-7.75% corridor, facilitating cheaper borrowing and investment.

Broader Economic Growth Context:

Tanzania's overall economic growth has benefited from this inflation stability, with real GDP expanding robustly in 2025. Projections indicate GDP growth of approximately 6% for the year, up from an estimated 5.4% in 2024, supported by low inflation that mitigates cost-of-living pressures and enhances fiscal space. Stable inflation has also helped maintain a manageable fiscal balance and improved the current account, as noted by the IMF, contributing to foreign exchange reserve buildup and reduced external vulnerabilities.

In the agricultural sector—a key driver of Tanzania's economy—inflation stability intersected with food security measures. The National Food Reserve Agency maintained stocks at 485,930 tonnes in July 2025, up significantly from 368,855 tonnes in July 2024, buffering against food price volatility and supporting rural livelihoods.

Challenges and Long-Term Implications:

While positive, food inflation's uptick (7.6%) highlights vulnerabilities to supply-side shocks, such as weather or global commodity trends (Mixed world commodity prices, with declines in maize and rice aiding stability). Overall, stable inflation has reinforced Tanzania's resilience, with the World Bank noting robust growth amid single-digit inflation. This environment positions Tanzania for sustained development, potentially accelerating poverty reduction and infrastructure investment, though external factors like global trade uncertainties could pose risks if inflation deviates.

Tanzania Monthly Economic Review - August 2025," a table of key figures relevant to Tanzania's economic performance, inflation, monetary policy, and related indicators:

Notes:

• Inflation rates are annual percentages based on the 2020 = 100 index.
• Monetary policy figures reflect decisions from the 237th MPC meeting in July 2025.
• Petroleum prices are approximate, based on trends, with values in Tanzanian Shillings (TZS) per liter.
• "N/A" indicates data not available or not directly comparable in the provided excerpts for the previous month.

This table summarizes key economic indicators that reflect Tanzania's economic stability and policy responses as of July 2025, providing a snapshot for further analysis.

In June 2025, Tanzania's headline inflation edged up slightly to 3.3% from 3.2% in May, driven primarily by a sharp rise in food and non-alcoholic beverages inflation to 7.3% (up from 5.6%), with unprocessed foods surging to 8.6% from 5.5%, as reported by the Bank of Tanzania's July 2025 Monthly Economic Review. This increase, fueled by higher prices for staples like maize flour, millet flour, beef, and fish, was partially offset by a decline in energy, fuel, and utilities inflation to 2.1% from 6.1%, reflecting softer wood charcoal and petroleum prices. Despite the uptick, the 3.3% rate remains well within Tanzania’s 3–5% national target and aligns with East African Community (EAC) and Southern African Development Community (SADC) benchmarks, supported by robust food reserves of 477,923 tonnes after a 32,414-tonne maize release by the National Food Reserve Agency.

1. Primary Drivers of the Slight Uptick in Headline Inflation to 3.3% in June 2025

Based on the Bank of Tanzania's Monthly Economic Review for July 2025, headline inflation experienced a modest increase to 3.3% in June 2025 from 3.2% in May, primarily due to upward pressures from food prices amid adequate overall supply conditions. This aligns with broader trends where food-related volatility has been a key factor in recent months. Here's a detailed breakdown:

• Food and Non-Alcoholic Beverages: This category, weighted at 28.2% in the Consumer Price Index (CPI, base 2020=100), was the main culprit behind the uptick. Annual inflation rose sharply from 5.6% in May to 7.3% in June, driven by higher prices for staple foods such as maize flour, millet flour, beef, and fish. Wholesale price data from the Ministry of Industries and Trade shows annual changes in staple food crops (e.g., maize and millet) contributing to this surge, with alternative foods like beans and sorghum also seeing price increases. To mitigate this, the National Food Reserve Agency (NFRA) released a net 32,414 tonnes of maize in June, reducing reserves from 509,990 tonnes in May to 477,923 tonnes (after a minor stock adjustment increase of 347 tonnes). Despite the drawdown, reserves remained robust—well above the 340,479 tonnes recorded in June 2024—helping to stabilize supply but not fully offsetting the price pressures.
• Unprocessed Food Prices: Inflation for non-core items (weighted at 26.1%) jumped to 7.1% in June from 5.6% in May, with unprocessed foods specifically surging to 8.6% from 5.5%. This subcategory was the primary driver of overall headline inflation, as highlighted in the contribution charts, underscoring the vulnerability of Tanzania's inflation to agricultural supply fluctuations, including seasonal factors and demand for alternatives to staples.
• Energy, Fuel & Utilities: Providing a counterbalancing effect, inflation in this category (weighted at 5.7%) decelerated significantly to 2.1% in June from 6.1% in May. The decline was mainly due to softening prices for wood charcoal and a continued downward trend in key petroleum products (petrol, diesel, and kerosene) since April 2025, mirroring global oil market developments. Domestic prices for these fuels, as tracked by the National Bureau of Statistics, have stabilized, helping to contain broader inflationary pressures.

Additional context from recent data (sourced via web searches on official sites like the Bank of Tanzania and National Bureau of Statistics as of August 2025): Tanzania's food inflation trends align with regional patterns, where rising global commodity prices (e.g., wheat up due to strong demand) have influenced imports, but domestic interventions like NFRA releases have prevented sharper spikes. Core inflation (weighted at 73.9%, excluding volatile items) eased to 1.9% from 2.1%, indicating underlying stability despite food volatility.

Overall, the slight headline uptick reflects food-driven pressures but was tempered by easing energy costs, keeping inflation low and contained.

2. Alignment with Tanzania's National Target and Regional Benchmarks

Tanzania's inflation performance in June 2025 remains strong, aligning well with both domestic and regional goals, as emphasized in the Bank of Tanzania report. This stability supports monetary policy objectives amid global uncertainties like geopolitical tensions and trade tariffs.

• Tanzania’s National Target: The medium-term inflation target is 3–5%, as outlined in the Bank's monetary policy framework. At 3.3%, June's headline rate is comfortably within this band, reflecting effective policy implementation, including maintaining the Central Bank Rate (CBR) at 6% to anchor expectations and sustain private sector credit growth. This low inflation environment also aligns with the broader goal of price stability to support economic growth, with the report noting resilience despite external headwinds.
• EAC and SADC Regional Benchmarks: Inflation trends in the East African Community (EAC) and Southern African Development Community (SADC) have generally stayed aligned with convergence criteria, though some member states faced elevated rates due to food price rises. Tanzania's 3.3% rate tracks closely with these benchmarks—the EAC macroeconomic convergence criterion targets headline inflation below 8% (with a medium-term aim around 5%), while SADC's is 3–7%. Charts in the report (e.g., Chart 1.3 for EAC and Chart 1.4 for SADC) show Tanzania's inflation below the dotted-line targets, indicating compliance. For instance, in EAC peers like Kenya and Uganda, inflation hovered around 4–6% in mid-2025 (per recent IMF and World Bank updates accessed via web search), while SADC averages were 4–5%, with outliers like Zimbabwe higher due to food issues.

Internet-sourced updates (e.g., from the EAC Secretariat and SADC websites as of August 2025) confirm Tanzania's alignment: The EAC's 2025 Monetary Affairs Committee report praises Tanzania's low inflation for aiding regional integration, and SADC's latest macroeconomic surveillance notes Tanzania's rate as a positive outlier amid global commodity volatility. This positions Tanzania favorably for regional trade and investment.

In summary, the 3.3% rate not only meets national targets but also supports EAC/SADC convergence, highlighting effective domestic policies amid contained global price pressures.

Summary Table

In Conclusion

The modest rise in Tanzania's headline inflation to 3.3% in June 2025 was predominantly fueled by escalating food prices, especially in unprocessed staples like maize and millet, despite proactive measures such as NFRA maize releases that maintained ample reserves. This was partially offset by declining energy and fuel inflation, aligning with global oil trends. Critically, the rate stays well within Tanzania's 3–5% national target and harmonizes with EAC and SADC regional benchmarks, underscoring the economy's resilience to external shocks like geopolitical tensions. Ongoing monetary policy stability and food supply interventions should continue to keep inflation contained, supporting sustained growth.

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.