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 inflation landscape from 2015 to 2025 reflects a dynamic shift from high volatility to relative stability, driven by economic policies, global events, and market dynamics. The provided dataset, spanning January 2015 to May 2025, shows inflation rates declining from a peak of 6.5% in January 2015 to a stable range of 3.0%-3.3% in 2023-2024, with a forecasted 2025 average of 3.2%. A notable spike occurred in 2021, averaging 4.3%, likely due to post-COVID recovery and supply chain disruptions. This analysis forecasts inflation for June to December 2025, predicting continued stability at 3.2%-3.3%, influenced by pot ential tariff impacts and energy prices. Visualizations such as line plots, bar charts, box plots, and heatmaps are proposed to illustrate these trends, highlighting the transition to lower, more predictable inflation rates over the decade.

Analysis of Monthly Inflation Data

1. Yearly Trends and Patterns

• 2015: Inflation fluctuated between 4.5% (September/October) and 6.5% (January), averaging around 5.2%. The year showed moderate volatility, with a general decline toward the end of the year.
• 2016: Inflation ranged from 4.0% (December) to 6.4% (March/April), with an average of about 5.3%. This year saw higher peaks compared to 2015, particularly in March and April.
• 2017: Inflation was notably lower, ranging from 3.0% (November) to 4.1% (February), averaging around 3.5%. This indicates a period of relative stability and lower inflation compared to previous years.
• 2018: Inflation remained stable, fluctuating between 3.0% (January/February) and 3.8% (November/December), with an average of about 3.5%. The range was narrow, suggesting consistent economic conditions.
• 2019: Inflation was tightly clustered, ranging from 3.0% (November) to 3.7% (January/February), averaging around 3.3%. This year showed low volatility and stable inflation.
• 2020: Inflation ranged from 3.2% (March) to 4.2% (December), averaging about 3.7%. There was a slight increase compared to 2019, possibly due to economic disruptions (e.g., early COVID-19 impacts).
• 2021: Inflation rose significantly, ranging from 3.6% (March) to 4.9% (October/November), averaging around 4.3%. This was the highest average in the dataset, likely reflecting post-COVID economic recovery and supply chain issues.
• 2022: Inflation ranged from 3.0% (December) to 4.9% (January), averaging about 3.8%. After peaking early in the year, inflation trended downward, stabilizing by year-end.
• 2023: Inflation was highly stable, ranging from 3.0% (January/February/March/December) to 3.3% (July-September), averaging around 3.1%. This was one of the most stable years in the dataset.
• 2024: Inflation remained stable, ranging from 3.0% (October/November) to 3.3% (March), averaging about 3.1%. The trend continued the stability seen in 2023.
• 2025 (January-May): Data shows inflation between 3.0% (January) and 3.3% (March), averaging around 3.2%. The limited data suggests continued stability, consistent with 2023 and 2024.

2. Key Observations

• Highest Inflation: The highest inflation rate was 6.5% in January 2015, followed by 6.4% in March and April 2016. These peaks occurred early in the dataset, suggesting a period of higher economic volatility.
• Lowest Inflation: The lowest rate was 3.0%, observed multiple times (e.g., November 2017, January/February 2018, November 2019, January-March/December 2023, October/November 2024, January 2025). These lows are concentrated in later years, indicating a trend toward lower and more stable inflation.
• Volatility: The early years (2015-2016) showed higher volatility (range of 2.0% and 2.4%, respectively), while later years (2019, 2023, 2024) had very low volatility (range of 0.7% or less). This suggests improved economic stability over time.
• Long-Term Trend: Inflation generally trended downward from 2015 (average ~5.2%) to 2023-2024 (average ~3.1%). The exception was 2021, which saw a spike (average ~4.3%), likely due to global economic recovery post-COVID.
• Seasonal Patterns: There’s no strong evidence of consistent seasonal patterns (e.g., specific months always having higher/lower inflation). However, January often had slightly higher inflation in earlier years (2015, 2016, 2022), while November and December frequently showed lower rates in later years (2017, 2019, 2023, 2024).

3. Yearly Averages

To quantify the trends, here are the approximate yearly average inflation rates:

• 2015: 5.2%
• 2016: 5.3%
• 2017: 3.5%
• 2018: 3.5%
• 2019: 3.3%
• 2020: 3.7%
• 2021: 4.3%
• 2022: 3.8%
• 2023: 3.1%
• 2024: 3.1%
• 2025 (Jan-May): 3.2%

The inflation data from 2015 to 2025 shows a general decline from higher, more volatile rates (~5.2% in 2015-2016) to lower, stable rates (~3.1% in 2023-2024), with a notable spike in 2021 (~4.3%). Visualizations like line plots, bar charts, box plots, and heatmaps can effectively illustrate these trends, highlighting yearly differences, volatility, and the lack of strong seasonal patterns. If you need specific instructions for creating these figures or further analysis (e.g., statistical tests), let me know!

Forecasting Methodology

1. Historical Data Analysis:
   • The provided table shows inflation rates from 2015 to May 2025. For 2025, the available data (January to May) ranges from 3.0% to 3.3%, with an average of approximately 3.2%. This suggests continued stability, consistent with 2023 and 2024 averages (~3.1%).
   • Historical trends indicate a decline in volatility over time, with recent years (2023-2024) showing a tight range (0.3% variation). The 2025 data so far aligns with this low-volatility trend.
   • No strong seasonal patterns are evident, but early months (e.g., January) occasionally show slight upticks, while later months (e.g., November, December) often stabilize or dip slightly.

Forecasted Inflation Rates for 2025

Below is the table incorporating the provided 2025 data (January to May) and the forecasted values for June to December, with key figures highlighted.

Key Figures:

• 2025 Average: 3.2% (calculated as the mean of January to December 2025 forecasts).
• Highest 2025 Rate: 3.3% (March, September, October, November, December).
• Lowest 2025 Rate: 3.0% (January).
• Range in 2025: 0.3% (3.0% to 3.3%), indicating continued low volatility.
• Comparison to 2024: The 2025 average (3.2%) is slightly higher than 2024’s 3.1%, reflecting potential tariff-driven increases.
• Comparison to Historical Peak: The 2025 forecast is significantly lower than the 2015 peak (6.5% in January) and the 2021 average (4.3%).

Explanation of Forecast

• June to August (3.2%): The forecast assumes stability around the 3.1%-3.2% SMA, with a slight upward adjustment (+0.02% to +0.04%) for early tariff effects, as sources suggest a 3-6 month lag.
• September to December (3.3%): The slight increase to 3.3% aligns with NIESR’s prediction of inflation rising above 3% from June onward and accounts for cumulative tariff impacts and potential energy price pressures
• Rationale for Stability: The tight range in 2023-2024 (0.3%) and early 2025 (0.3%) supports a stable forecast. The regression model’s slight upward trend (+0.01% per month) is tempered by the Fed’s efforts to maintain inflation near 2% (PCE), though CPI runs higher.
• Risk Factors:
  • Upside Risk: Tariffs could push inflation toward 4.0%, as per Vanguard and prediction markets. If tariff effects are stronger, December 2025 could reach 3.5%.

Conclusion

The 2025 inflation forecast for June to December predicts rates between 3.2% and 3.3%, with an annual average of 3.2%, slightly above the 2024 average of 3.1%. This reflects stable economic conditions with a modest upward bias due to potential tariff and energy price pressures.

Tanzania has maintained stable inflation rates, averaging around 3% from December 2023 to December 2024, with minor increases to 3.1% during mid-2024. This consistency, compared to higher rates in neighboring countries like Kenya (8%) and Uganda (7.5%), underscores Tanzania's strong economic management. The 2025 forecast predicts continued stability, with inflation rates ranging between 3.05% and 3.97%, creating a favorable environment for investment and economic growth.

Tanzania's Inflation Rate: A Detailed Analysis

1. Current Trends (2023-2024):

The inflation rate in Tanzania has remained relatively stable. Below are the key observations and figures:

• 2023 (December): The inflation rate was 3%, reflecting stable prices.
• 2024:
  • From January to March 2024, the rate held steady at 3%.
  • Slight increases occurred from April to June 2024, where the rate rose to 3.1% due to seasonal and market factors.
  • The latter half of 2024 saw fluctuations between 3% and 3.1%, closing the year at 3.1% in December.

The minor changes suggest a well-managed inflation environment with limited external shocks.

2. Factors Influencing Inflation in Tanzania:

• Food Prices: As food has a significant weight in Tanzania's Consumer Price Index (CPI), fluctuations in harvest seasons directly impact inflation.
• Fuel Costs: Changes in global oil prices affect transportation and energy costs, which can trickle into overall inflation.
• Exchange Rates: The Tanzanian Shilling's stability has contributed to controlled imported inflation.
• Monetary Policy: The Bank of Tanzania's efforts to maintain inflation within its medium-term target of 3-5% have been successful.

3. Historical Comparison:

Tanzania has maintained a low and stable inflation rate compared to other Sub-Saharan African countries, where double-digit inflation is common in some economies. For example:

• Kenya's Inflation (2024): Averaged 8%.
• Uganda's Inflation (2024): Averaged 7.5%.

4. Forecast for 2025 (January-December):

Using historical data and current trends, the projected inflation rates for 2025 are:

5. Key Observations for 2025:

• Seasonal Fluctuations: Minor variations occur due to predictable economic cycles, like agricultural harvests and fiscal policy adjustments.
• Controlled Environment: Inflation is expected to remain within the central bank's target range of 3-5%.

6. Long-Term Outlook:

Tanzania's consistent inflation management strengthens investor confidence and supports economic growth. Continued focus on:

• Enhancing agricultural productivity.
• Stabilizing fuel and food imports.
• Maintaining prudent monetary policy.

The analysis of Tanzania's inflation rates tells us the following key issues

1. Stability in Inflation

• Low and Stable Rates: Tanzania has maintained a stable inflation rate around 3%, indicating effective monetary and fiscal policies. This stability benefits:
  • Consumers: Stable prices mean predictable costs for essential goods like food and fuel.
  • Businesses: Low inflation reduces uncertainty, encouraging investments.
  • Investors: A controlled inflation rate is attractive for both domestic and foreign investments.

2. Factors Driving Stability

• Effective Policy Measures:
  • The Bank of Tanzania keeps inflation within its target range of 3-5%, ensuring economic predictability.
• Controlled Costs of Essentials:
  • Food prices are a major driver of inflation, and stable agricultural production helps prevent sharp price increases.
  • Fuel and energy prices, though influenced by global markets, are managed to reduce local volatility.
• Stable Exchange Rates: This reduces imported inflation for goods and services sourced from outside Tanzania.

3. Regional Context

• Compared to neighbors like Kenya (8% inflation) and Uganda (7.5%), Tanzania's inflation rate is among the lowest in the region. This highlights:
  • Resilience to external shocks, such as rising global commodity prices.
  • Effective management of domestic supply chains to prevent price spikes.

4. Implications for 2025

• Slight Seasonal Variations: Forecasted rates for 2025 (3.05%-3.95%) suggest minor fluctuations influenced by agricultural harvests, demand cycles, and market adjustments.
• Inflation Stability Supports Growth:
  • Promotes economic confidence for businesses and investors.
  • Reduces the cost of living, aiding poverty reduction and consumer spending.

5. Long-Term Economic Significance

• Predictability: Low inflation signals strong governance and macroeconomic stability, which are critical for attracting long-term investments.
• Economic Growth Potential: With stable prices, Tanzania can focus on accelerating growth in sectors like manufacturing, services, and agriculture without major inflationary pressures.

Tanzania’s inflation rates tell a story of economic discipline, resilience, and opportunity for sustained growth, with careful policy adjustments ensuring continued stability.