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.