Key Drivers and Regional Alignment

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.