In the fiscal year 2023/24, Tanzania successfully maintained its inflation rate within the national medium-term target of 3-5%, averaging 3.1%, a decrease from 4.6% in the previous year. However, regional disparities were evident: the Dar es Salaam Zone recorded the highest inflation at 5.4%, driven by rising non-food prices in categories such as housing and transport, while the Lake Zone enjoyed the lowest rate at 1.2%, reflecting the benefits of good harvests that reduced food prices significantly. Other regions displayed varying inflation levels, with the Northern Zone at 3.6%, the Central Zone at 2.5%, the South Eastern Zone at 2.4%, and the Southern Highlands Zone at 3.7%. This regional data underscores the critical role of agricultural performance in inflation control and highlights the need for targeted interventions in urban areas like Dar es Salaam to manage rising living costs effectively.

1. National Inflation:
   • Overall national inflation averaged 3.1% in 2023/24, a decrease from 4.6% in the previous year (2022/23).
2. Regional Inflation Rates:
   • Dar es Salaam Zone: Registered the highest inflation at 5.4%, up from 4.0% the previous year. This increase was driven by higher prices of non-food items, including clothing, footwear, housing, transport, and accommodation services.
   • Lake Zone: Experienced the lowest inflation rate of 1.2%, significantly down from 5.0% in 2022/23. This decrease was mainly due to lower food prices following good harvests.
   • Northern Zone: Inflation was 3.6%, slightly lower than the previous year’s 4.5%.
   • Central Zone: Recorded an inflation rate of 2.5%, down from 5.0% in 2022/23.
   • South Eastern Zone: Inflation eased to 2.4%, from 3.8% in 2022/23.
   • Southern Highlands Zone: Inflation was 3.7%, down from 5.0% the previous year.
3. Factors Influencing Inflation:
   • Decrease in Food Prices: Good harvests in the 2022/23 crop season led to reduced food prices in most zones, helping lower inflation rates.
   • Non-Food Price Increases: In Dar es Salaam, inflation pressures were higher due to rising costs in non-food categories, such as housing and transport.

The regional inflation from 2023/24 with insights about Tanzania’s economic dynamics:

1. Food Security and Inflation Control:
   • Lower inflation rates in most regions, particularly the Lake Zone (1.2%), indicate the positive impact of good harvests on food prices. This suggests that agriculture continues to play a central role in controlling inflation, as food prices significantly influence overall inflation rates in Tanzania.
2. Cost of Living Disparities:
   • Higher inflation in Dar es Salaam (5.4%) points to the growing cost of living in urban areas, where demand for non-food items—such as housing, transport, and services—is more pronounced. This urban inflation pressure suggests that Tanzania’s cities, especially Dar es Salaam, may require targeted interventions to stabilize costs in these sectors.
3. Dependence on Agriculture:
   • The decline in inflation in regions with strong agricultural production underscores the dependence of inflation control on agriculture. Tanzania’s reliance on food production for inflation management makes the economy sensitive to agricultural output and, by extension, climate variability. This highlights a need for diversification to reduce this vulnerability.
4. Challenges in Managing Non-Food Inflation:
   • Despite national inflation targets being met, the rise in non-food prices, particularly in Dar es Salaam, reflects challenges in areas like housing and transportation. Addressing these could involve infrastructure investments, better urban planning, and policies to stabilize these costs.
5. Uneven Economic Pressures:
   • The disparity in inflation rates across zones highlights uneven economic pressures and varying needs. While rural areas benefit from stable or falling food prices, urban areas face rising living costs, suggesting that policies may need to address regional inflation drivers more specifically.

Activities across zones

In the fiscal year 2023/24, Tanzania's trade landscape, particularly in cross-border activities, displayed notable shifts across various regions. The overall trade surplus with neighboring countries decreased by 23.1%, settling at TZS 4,484.3 billion, driven by reduced exports in key sectors such as minerals and agricultural products, along with rising imports of manufactured goods. The Lake Zone emerged as the largest contributor to exports, totaling TZS 4,699.7 billion but marking a decline of 6.6% from the previous year, while the Southern Highlands saw a significant growth in agricultural exports, increasing by 17.4% to TZS 4,393.7 billion. Conversely, the Northern Zone faced a trade deficit of TZS 466.9 billion due to surging imports, highlighting a growing dependency on external goods. These dynamics underscore both the challenges and opportunities in Tanzania’s trade framework, emphasizing the need for policy interventions to bolster local production and enhance competitiveness in global markets.

1. Cross-Border Trade Surplus:
   • The overall trade surplus with neighboring countries narrowed by 23.1%, totaling TZS 4,484.3 billion. This decline was due to reduced exports, notably in minerals, fertilizers, live cattle, fish, and other consumables, coupled with increased imports of manufactured goods​.
2. Exports by Zone:
   • Lake Zone:
     • Export value: TZS 4,699.7 billion, a decrease of 6.6% from the previous year.
     • Lake Zone still accounted for the largest share of exports at 44.6% of total cross-border exports.
   • Southern Highlands:
     • Export value: TZS 4,393.7 billion, an increase of 17.4% year-over-year, reflecting growth in agricultural exports.
   • Northern Zone:
     • Export value: TZS 1,355.1 billion, showing a decrease of 7.2% from the prior year.
   • South Eastern Zone:
     • Export value was much smaller at TZS 96.8 billion, yet it marked a significant increase, suggesting emerging trade activities in this region​.
3. Imports by Zone:
   • Lake Zone: Recorded TZS 1,037.3 billion in imports, a slight decrease of 0.4%, accounting for 17.1% of the total import share.
   • Southern Highlands: Imported goods valued at TZS 3,200.4 billion, an increase of 55.5%, accounting for 52.8% of the total imports, driven mainly by manufactured goods.
   • Northern Zone: Imports rose to TZS 1,822.1 billion, a 38.2% increase, reflecting higher demand for goods like plastics, machinery, pharmaceuticals, and chemicals​(2024110115114536).
4. Trade Balance by Zone:
   • Lake Zone: Despite a reduction, it maintained a strong trade surplus of TZS 3,662.4 billion.
   • Southern Highlands: Had a surplus of TZS 1,193.3 billion, though it decreased by 29.1% compared to the previous year.
   • Northern Zone: Notably recorded a trade deficit of TZS 466.9 billion due to higher imports of manufactured goods.
   • South Eastern Zone: Saw a positive trade balance of TZS 95.5 billion, benefiting from growth in exports​.

Tanzania’s fiscal year 2023/24 provides insights into regional economic trends, challenges, and opportunities:

1. Strong Export Dependency on Agriculture:
   • Regions like the Lake Zone and Southern Highlands have robust exports, largely driven by agriculture, which accounted for significant shares of the country’s exports. This reliance on agricultural exports shows the importance of the agricultural sector to Tanzania’s trade balance but also highlights vulnerability to fluctuations in global demand or agricultural productivity.
2. Increasing Import Dependency:
   • The narrowing trade surplus and growth in imports, particularly in the Northern Zone, indicate rising domestic demand for manufactured goods like machinery, chemicals, and pharmaceuticals. This trend suggests that as Tanzania’s economy grows, there is an increasing need for imported industrial and consumer goods, possibly due to limited domestic production capacity for these items.
3. Regional Trade Imbalances:
   • The Lake Zone and Southern Highlands maintain trade surpluses, indicating these areas are economic strongholds in export production. In contrast, the Northern Zone recorded a trade deficit, driven by higher import needs. This imbalance points to a need for economic diversification in regions with trade deficits, as well as opportunities to boost local production to meet domestic demand and reduce import reliance.
4. Emerging Trade Activity in South Eastern Zone:
   • The growth in exports and trade balance in the South Eastern Zone, although from a smaller base, suggests that this region is starting to gain traction in cross-border trade. This growth could reflect improvements in infrastructure or strategic efforts to diversify Tanzania’s export portfolio.
5. Challenges with Export Competitiveness:
   • The overall reduction in exports, particularly in minerals and other commodities, indicates potential challenges in maintaining competitiveness or meeting international demand. This decrease could signal the need for investment in value-added processing to make Tanzania’s exports more competitive globally, beyond raw materials and basic agricultural products.
6. Trade as an Economic Indicator:
   • The trade patterns reflect broader economic dynamics, such as the growth in consumption and industrial needs across regions, increased reliance on imports, and the potential for further industrialization. The demand for imports underscores Tanzania’s growing economy, while the dependency on specific zones for export revenue highlights areas for policy focus, such as regional economic development, infrastructure, and manufacturing incentives.