Why Tanzania Maintained 3.3 Percent Inflation While Neighbours Faced Higher Prices

DAR ES SALAAM — Tanzania maintained average consumer price inflation of 3.3 percent in 2025, confirming its position as one of East Africa's most price-stable economies. The rate is up marginally from 3.1 percent in 2024, driven by a temporary food supply reduction resulting from increased sales of domestic food production to neighbouring markets, but remains within Tanzania's 3.0 to 5.0 percent national target band and well below the EAC convergence ceiling of 8.0 percent. The regional comparison Tanzania's 3.3 percent stands in sharp contrast to the inflationary experience of several regional neighbours. Burundi recorded 34.2 percent average inflation in 2025, up from 20.2 percent in 2024, driven by fiscal pressure, exchange rate weakness, and import cost increases. Rwanda recorded 7.0 percent, up from 4.8 percent in 2024, approaching the top of its target range amid food and energy price pressures. Kenya recorded 4.5 percent, managing to stay within its target range despite currency depreciation episodes in 2024. Uganda recorded 3.6 percent, just above Tanzania's rate but similarly stable. The EAC regional average inflation rate, weighted across member states, was substantially higher than Tanzania's rate because of Burundi's extreme figure and South Sudan's continued hyperinflationary environment. Tanzania's individual performance therefore represents a genuine relative achievement rather than a regional trend it happens to share. What produced the stability Four factors explain Tanzania's inflation performance. Monetary policy consistency: The Bank of Tanzania maintained the Central Bank Rate at 6.00 percent through early FY2025/26 before reducing it to 5.75 percent in July to December 2025, signalling confidence that inflation was sufficiently contained to allow easing without price pressure. The interbank lending rate remained within the ±2 percent CBR corridor throughout the period, confirming that liquidity management matched the policy stance. Food surplus: Tanzania's 130 percent food self-sufficiency rate means domestic food prices are not driven by import costs or seasonal scarcity in ways that create the inflation spikes seen in net food-importing neighbours. The Strategic Grain Reserve at 776,000 tonnes provides a price stabilisation buffer. Petroleum cost reduction: The value of petroleum imports fell 21.9 percent from USD 2,837.2 million to USD 2,216.0 million in 2025, following global oil price moderation. Petroleum-driven cost-push inflation, which contributed to price pressures in 2022 and 2023 across East Africa, was not a significant factor in Tanzania's 2025 inflation dynamics. Exchange rate stability: The Tanzania shilling maintained relative stability against major trading currencies, avoiding the imported inflation that currency depreciation episodes generate in import-dependent economies. Foreign reserves at 4.9 months of import cover, above the EAC's 4.5-month criterion, provided the buffer that sustained exchange rate confidence. The 2026 outlook The plan projects inflation at 4.0 percent in 2026, within the same 3.0 to 5.0 percent target band. The slight projection increase from 3.3 percent actual to 4.0 percent projected reflects anticipated food price normalisation as domestic sales to neighbours moderate and as global commodity price uncertainty in 2026 is factored into the projection.