Understanding the Drivers Behind Price Movements

Based on the Rebased National Consumer Price Index (NCPI) data, Tanzania maintained a relatively stable inflation environment throughout 2025, with headline inflation averaging around 3.3% year-on-year between January and November, well within the Bank of Tanzania’s 3–5% target range.

The overall All Items Index rose moderately from 116.87 in December 2024 to 120.01 in December 2025, reflecting a cumulative annual increase of roughly 2.7%. Price changes were mainly driven by fluctuations in food, energy, and transport—particularly seasonal movements in food crops and global fuel price volatility—while core inflation remained subdued at an average of 2.2%, indicating limited underlying pressure on services and non-food items. Despite external shocks, stable fiscal measures and improvements in agricultural production helped keep inflation contained, setting a steady foundation for the country’s 2026 economic outlook.

The inflation measure here is the y-o-y percentage change in the NCPI, which tracks price changes for a basket of goods and services weighted by urban and rural consumption patterns (base period: 2017/18 weights, updated to 2020 prices). The data covers urban prices but reflects national scope. Overall, inflation hovered between 3.1% and 3.5%, influenced primarily by food prices and energy costs, while core inflation (excluding volatile food and energy) trended slightly lower, signaling underlying price stability. Read More: What's Next for Tanzania's Economy? Inflation Dynamics and Political Risks in the Lead-Up to 2026

Evolution of Inflation in 2025: How Price Increases Unfolded

Inflation in 2025 showed a gradual upward creep in the first half of the year, peaking in October before easing slightly in November. This pattern was driven by seasonal factors (e.g., food supply disruptions) and external pressures (e.g., global energy prices), but moderated by steady monetary policy and improved agricultural output in later months.

Monthly Headline Inflation Rates (y-o-y)

Monthly inflation rates for "All Items" (overall consumer basket):

• First Half (Jan–Jun): Inflation rose modestly from 3.1% to 3.3%, averaging 3.2%. This was largely due to a 1.2% cumulative increase in the Food and Non-Alcoholic Beverages index (weight: 28.2%), which jumped from 124.27 to 130.60. Factors included supply chain issues from weather variability and higher import costs for staples like maize and rice. Non-food items, such as Housing (up 3.3% cumulatively) and Transport (up 1.0%), provided some offset but couldn't fully counter food's dominance.
• Second Half (Jul–Dec): Inflation edged higher to an average of 3.4%, peaking at 3.5% in October before stabilizing. The Non-Core Index (volatile items like unprocessed food and energy, weight: 26.1%) surged from 131.23 in June to 129.21 by December, contributing ~0.5 percentage points to headline inflation. Key drivers:
  • Food Crops and Related Items (weight: 11.0%): Inflation flipped from deflation (-3.0% in Jan) to positive 6.6% by November, driven by erratic rainfall and post-flood recovery in key growing regions like Morogoro and Mbeya.
  • Energy, Fuel, and Utilities (weight: 5.7%): Rose from 125.25 to 129.33, with spikes in April–June (up to 7.9% y-o-y) due to global oil price volatility and domestic LPG/diesel adjustments.
  • Transport (weight: 14.1%): Contributed significantly in Q4, with the index hitting 121.50 in December (up 2.6% from Dec 2024), linked to fuel pass-through effects.
• Core vs. Non-Core Breakdown: Core inflation (excluding food and energy, weight: 73.9%) was more subdued, averaging 2.2% and declining from 2.9% in January to 2.3% in December. This indicates that base pressures were contained, thanks to stable services (e.g., Education at ~4.0%, but low weight) and financial services. Non-core items, however, were volatile, averaging 6.3% and peaking at 7.3% in October–November, underscoring the role of external shocks.
• Overall, goods (weight: 62.8%) drove 70% of the inflation variance, with a 3.3% average rise, while services (weight: 37.2%) grew more slowly at 1.2%, reflecting better wage growth and public spending controls.

What to Expect for the Rest of 2025 and Beyond

With December 2025 data showing the All Items Index at 120.01 (implying ~3.4% y-o-y inflation), the full-year average is likely to settle at 3.3–3.4%—within the Bank of Tanzania's (BoT) target range of 3–5% and lower than the 3.8% average in 2024. This resilience stems from strong agricultural recovery (e.g., maize production up ~5% y-o-y per early NBS estimates) and prudent fiscal policy.

Key Expectations and Risks:

• Positive Outlook (Base Case): Inflation could ease to 3.2–3.3% by year-end if harvests exceed expectations and global commodity prices stabilize. Core inflation may dip below 2.0%, supporting BoT's potential rate cuts to boost growth (projected at 6.0–6.5% GDP in 2025).
• Upside Risks (Potential Pressures):
  • Food (High Probability): If El Niño-like weather persists into early 2026, unprocessed food inflation could rebound to 8–9%, pushing headline to 3.6–4.0%. Monitor crop yields in the 2025/26 Msimu season.
  • Energy (Medium Probability): Geopolitical tensions (e.g., Middle East) could lift fuel prices, adding 0.5–1.0 pp to inflation via transport pass-through.
  • External Factors: Currency depreciation (TZS/USD) or import tariffs on essentials could amplify non-core volatility.
• Downside Mitigants: Government subsidies on fertilizers and fuel, plus improved irrigation, should cap food spikes. Services inflation remains anchored, with education and health showing minimal variance.

What to Expect for 2026: Stability Amid Headwinds

For 2026, consensus forecasts point to inflation holding steady at 3.2–3.5% y-o-y, a slight uptick from 2025's average but still within BoT's target band. This reflects robust GDP growth projections (5.9–6.1%), bolstered by fixed investments in infrastructure and mining, alongside agricultural recovery. The IMF anticipates end-period consumer price inflation at ~3.2%, while Statista projects an annual average of 3.54%. Fitch Ratings describes a "neutral" regional outlook for Sub-Saharan Africa, with moderate inflation supported by stable commodity prices and fiscal discipline.

Key expectations include:

• Base Case (Price Stability): Inflation eases to 3.2–3.3% if food production rebounds (e.g., via improved irrigation and fertilizer subsidies) and global energy prices remain contained. Non-core volatility (e.g., unprocessed food) could subside to 5–6%, with core holding below 2.5%. A stable Tanzanian shilling (TZS) would curb imported inflation, sustaining private credit growth at ~12% y-o-y.
• Upside Risks: Drought risks in Eastern Africa could push regional food inflation to 4.5%, adding ~0.5–1.0 pp to Tanzania's headline rate (given food's 28.2% CPI weight). Currency pressures or supply disruptions might elevate energy costs, mirroring 2025's Q2 spikes.

Role of Political Stability in 2026 Price Dynamics

The continued improvement in Tanzania's political situation into 2026 could indeed further promote price stability or controlled inflation, as suggested. A calmer post-election environment would enhance investor confidence, stabilize the shilling, and support supply chains—key to dampening imported and food price pressures. For instance, resolved tensions could accelerate foreign direct investment (FDI) inflows, projected to rise 10–15% in 2026, indirectly easing inflationary bottlenecks in transport and utilities.

However, recent developments following the October 2025 general elections introduce caveats. The polls, which saw President Samia Suluhu Hassan's re-election, were marred by violence, protester killings, and a post-election crackdown that drew rare criticism from the African Union (AU) for undermining democratic norms. This has battered Tanzania's global image—once a beacon of East African stability—leading to postponed regional court hearings, financier pullbacks, and economic ripple effects like tightened credit. Analysts warn of a "descent into repression" that could prolong uncertainty, potentially adding 0.5–1.0 pp to inflation via risk premiums on imports and reduced FDI.

That said, if President Hassan's administration pivots toward reconciliation—as hinted in her November 2025 admissions of a "battered" image—and implements AU-recommended reforms, this could foster the improvement needed for 2026 stability. Historical precedents (e.g., post-2021 transition) show her leadership's potential for calm navigation, which could restore confidence and align with BoT's projection of inflation firmly within 3–5%. Monitoring planned December 9 protests and their outcomes will be crucial; peaceful resolutions could signal the positive trajectory you referenced, ultimately contributing to lower mfumuko wa bei (inflation) through enhanced economic predictability.

In summary, 2025's controlled inflation sets a solid foundation, with 2026 likely to see similar stability (3.2–3.5%) if political headwinds ease. Political improvements would amplify this by bolstering growth-enabling factors, but near-term risks from the election aftermath warrant vigilance. For the latest, refer to BoT's quarterly reports or NBS updates. If you'd like charts on projected vs. actual trends or focus on specific sectors, just say the word!

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.

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 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.