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’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.