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.
This means that on average, the prices of food and non-alcoholic beverages increased by 7.7% over the year.
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:
These declines helped stabilize the monthly food inflation despite strong annual growth.
Key Insights
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.
| Period | Food CPI Index (2020=100) | Annual Food Inflation Rate (%) | Monthly Change (%) |
| August 2024 | 121.12 | - | - |
| July 2025 | 130.47 | 7.6* | - |
| August 2025 | 130.48 | 7.7 | 0.0 |
*Note: July 2025 food inflation rate (7.6%) is mentioned in the text as comparison to August 2025 rate.
| Index Type | Weight (%) | Index Value (2020=100) | Annual Inflation Rate (%) |
| Core Index | 73.9 | 115.98 | 2.0 |
| Non-Core Index | 26.1 | 130.51 | 7.3 |
| Energy, Fuel and Utilities | 5.7 | 130.72 | 2.6 |
| Services Index | 37.2 | 112.69 | 0.8 |
| Goods Index | 62.8 | 123.96 | 4.9 |
| Education Services | 4.1 | 114.32 | 2.8 |
| All Items Less Food | 71.82 | 115.56 | 1.6 |
Key Highlights:
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.
| Implication | Key Figure (August 2025) | Broader Effect |
| Cost of Living | Food Inflation: 7.7% | Reduces real incomes, especially for urban poor; offsets non-food stability (1.6%). |
| GDP Contribution | Agriculture: 25-30% | Volatility threatens 6.0% growth forecast; potential for welfare gains long-term. |
| Poverty Risk | Households Affected: ~57% (2024 data) | Exacerbates hunger-poverty nexus in SSA. |
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.