In June 2025, Tanzania’s headline inflation rate stood at 3.3%, a slight increase from 3.2% in May 2025, remaining within the government’s 3–5% target and aligned with SADC/EAC benchmarks. However, the sharp rise in food inflation to 5.6% in May 2025, driven by supply chain disruptions and price spikes in staples like rice (2.5%), maize flour (0.8%), and cassava (4.2%), significantly impacts the cost of living, particularly for low-income households reliant on these goods. While energy and utilities inflation eased to 6.1% from 7.3% a year earlier, housing costs (7.2% annual increase) and non-food items like charcoal (1.5%) continue to strain budgets. With approximately 26% of Tanzanians living below the poverty line and 80% in the informal sector, these price pressures could exacerbate poverty, fuel wage demands, and challenge economic stability, despite a stable core inflation rate of 1.9%.

Key Inflation Metrics (June 2025)

• Headline Inflation: The annual headline inflation rate for June 2025 is 3.3%, slightly up from 3.2% in May 2025, but within the Tanzanian government's target range of 3–5% and aligned with Southern African Development Community (SADC) and East African Community (EAC) benchmarks. This indicates relative macroeconomic stability.
• Core Inflation: Excluding volatile items like unprocessed food and energy, core inflation decreased to 1.9% in June 2025 from 2.1% in May 2025, reflecting stable prices for non-volatile goods and services.
• Food Inflation: Food and non-alcoholic beverages, which constitute 28.2% of the NCPI basket, saw a 3.5% annual price increase in June 2025, up from a 0.7% monthly rise. Specific food items driving this include rice (2.5%), sorghum grains (1.2%), finger millet grains (7.0%), maize flour (0.8%), cooking bananas (3.9%), and dry cassava (4.2%). Food inflation has risen sharply from 1.6% in May 2024 to 5.6% in May 2025, primarily due to transportation disruptions and supply chain challenges.
• Energy, Fuel, and Utilities: Inflation in this sector decreased from 7.3% in May 2024 to 6.1% in May 2025, reflecting a decline in global oil prices. However, items like charcoal (1.5%) and diesel (0.7%) still saw monthly price increases in June 2025.
• Non-Food Items: Price increases in non-food items, such as garments for men and children (0.2–0.3%), footwear for children (0.3%), household furniture (0.4%), and laptop computers (0.6%), contributed to the overall NCPI rise from 119.85 in May 2025 to 120.18 in June 2025 (a 0.3% monthly increase).

Impact on Cost of Living

1. Food Price Pressures:
   • Food and non-alcoholic beverages, with a significant weight of 28.2% in the NCPI, are a major driver of the cost of living, especially for low-income households who allocate a large share of their budgets to food. The 5.6% food inflation rate in May 2025, coupled with specific increases in staples like rice, maize, and cassava, directly raises household expenses.
   • For example, a 7.0% rise in finger millet grains and 4.2% in dry cassava disproportionately affects rural and low-income households reliant on these staples. This could lead to reduced purchasing power and potential shifts to lower-quality or less nutritious food options, exacerbating food insecurity.
2. Non-Food and Energy Costs:
   • While energy inflation has moderated to 6.1%, the rise in charcoal and diesel prices still impacts household budgets, particularly for cooking and transportation. Urban households, reliant on purchased fuels, feel this pinch more acutely.
   • Non-food items like clothing, footwear, and household goods saw modest increases (e.g., 0.2–0.4%), which cumulatively add to living costs, especially for families with children or those maintaining homes.
3. Housing and Utilities:
   • The housing, water, electricity, gas, and other fuels category, with an 18% weight in the NCPI, recorded a 0.4% monthly decrease but a 7.2% annual increase. Rising rental costs (0.3%) and maintenance materials (0.2%) contribute to higher living expenses, particularly in urban areas like Dar es Salaam.

Impact on Poverty Levels

• Increased Poverty Risk: The sharp rise in food inflation (5.6%) outpaces headline inflation (3.3%), disproportionately affecting low-income households. According to the World Bank, approximately 26% of Tanzanians lived below the international poverty line ($2.15/day, 2017 PPP) in recent estimates. Higher food prices could push more households into poverty, particularly in rural areas where agriculture is a primary livelihood but supply disruptions increase costs.
• Nutritional Impact: Price spikes in staples like maize and rice may force households to reduce consumption or switch to less nutritious alternatives, potentially worsening malnutrition rates, especially among children. Tanzania’s 2022 Demographic and Health Survey reported 30% of children under five are stunted, and rising food costs could aggravate this.

Influence on Wage Demands

• Pressure for Higher Wages: The rising cost of living, driven by food and non-food price increases, is likely to spur demands for wage adjustments, particularly in urban areas and formal sectors. Public sector workers and trade unions may push for salary hikes to match the 3.3% headline inflation rate or the higher 5.6% food inflation rate.
• Informal Sector Challenges: Over 80% of Tanzania’s workforce is in the informal sector, where income adjustments are less structured. These workers may struggle to cope with rising costs, potentially leading to social unrest or increased reliance on government subsidies.

Economic Stability

• Stable Macroeconomic Environment: The headline inflation rate of 3.3% remains within the government’s 3–5% target and aligns with SADC/EAC benchmarks, signaling relative economic stability. The decline in core inflation to 1.9% further supports this, as it indicates controlled price growth in non-volatile sectors.
• External Factors: Easing global oil prices have reduced energy inflation, providing some relief to transport and production costs. However, transportation disruptions (e.g., weather-related issues or infrastructure bottlenecks) have driven food inflation, highlighting vulnerabilities in domestic supply chains.
• Policy Implications: The Bank of Tanzania is likely to maintain a cautious monetary policy to keep inflation within the target range. However, persistent food price increases may necessitate targeted interventions, such as subsidies for staples or investments in agricultural logistics, to stabilize prices.

Analytical Insights

• Sector-Specific Impacts: Food inflation’s dominance reflects Tanzania’s reliance on agriculture and vulnerability to supply shocks. While energy price relief is positive, the overall cost-of-living increase strains household budgets, particularly for the poor.
• Poverty and Inequality: The disproportionate impact of food inflation on low-income households could widen inequality, as wealthier households are better equipped to absorb price shocks. This may exacerbate urban-rural disparities, given higher urban exposure to non-food costs like rent and fuel.
• Wage Dynamics: Rising costs may fuel labor market tensions, but the informal sector’s dominance limits broad wage adjustments, potentially increasing reliance on social safety nets.
• Long-Term Stability: The stable headline inflation rate and declining core inflation suggest effective macroeconomic management, but addressing food supply chain issues is critical to sustaining this stability.

Conclusion

Inflation in Tanzania, at 3.3% in June 2025, remains manageable but masks sector-specific pressures, particularly in food (5.6%), which significantly impacts the cost of living for low-income households. This could exacerbate poverty and malnutrition risks, especially in rural areas. Wage demands are likely to rise, particularly in formal sectors, but the informal economy’s dominance limits broad relief. While macroeconomic stability is maintained, addressing food supply chain disruptions is critical to mitigating cost-of-living pressures and ensuring long-term economic stability. Targeted policies, such as food subsidies or infrastructure improvements, could alleviate these challenges.

Below is a table presenting the Annual Inflation Rates by Main Groups for June 2025, based on the data from the provided document. The table includes the main groups, their respective weights in the National Consumer Price Index (NCPI), and the 12-month percent change (annual inflation rate) for June 2025.

Notes:

• The 12-Month Percent Change represents the annual inflation rate for each group, calculated as the percentage change in the NCPI from June 2024 to June 2025 (base year: 2020 = 100).
• The Housing, Water, Electricity, Gas, and other group has the highest inflation rate at 7.2%, driven by items like rentals and utilities.
• Information and Communication recorded a 0.0% inflation rate, indicating price stability in this sector.
• The overall All Items Index inflation rate is 3.3%, reflecting a stable macroeconomic environment within Tanzania’s target range of 3–5%.

Below is a table summarizing key figures related to inflation in Tanzania for June 2025, drawn from the provided document and incorporating relevant details from the earlier context. The table focuses on essential metrics to provide a concise overview of inflation, its sectoral impacts, and related economic indicators.

Notes:

• Headline Inflation: The 3.3% rate in June 2025 aligns with SADC/EAC benchmarks, indicating macroeconomic stability.
• Food Inflation: The 5.6% rate (May 2025) and 3.5% for June 2025 reflect supply chain issues, notably transportation disruptions, impacting staples critical to low-income households.
• Core Inflation: The decline to 1.9% suggests stable pricing for non-volatile goods, beneficial for policy planning.
• Economic Context: Rising food and housing costs disproportionately affect low-income households, potentially increasing poverty and malnutrition risks. The informal sector’s dominance complicates wage adjustments, heightening pressure on social safety nets.
• Data Source: Figures are primarily from the provided NCPI document (June 2025), with poverty and stunting rates from external sources (World Bank, Demographic and Health Survey).

This table consolidates critical inflation-related figures to highlight their implications for cost of living and economic stability.

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.