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Inflation

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Tanzania’s inflation rate has seen a notable decline over the past few years. After reaching a peak annual inflation rate of 16% in 2012, the rate has steadily decreased, hitting a low of 3.3% in 2020. Although there has been a mild upward trend since then, it remains much lower compared to other markets. The inflation rate was 3.7% in 2021 and rose to 4.4% in 2022. By December 2023, Tanzania’s annual inflation rate had decreased to 3%, and it stood at 3.1% in May 2023.

Tanzania Inflation Rate in 2024

In the first five months of 2024, Tanzania’s average annual inflation was 3%. This is significantly lower than the 3.8% recorded in 2023, 4.4% in 2022, and 3.7% in 2021.

Tanzania Inflation Rate in 2023

Tanzania Inflation Rates 2012-2023

Tanzania’s average annual inflation in 2023 was 3.8%, which is much less than the 4.3% recorded in 2022, but still slightly more than 3.7% in 2021.

The annual inflation rate was at its highest in January 2023 at 4.9% and has regularly fallen since then.

Tanzania’s annual inflation rate in December 2023 was 3% which is much less than the 4.8% recorded in December 2022 and 4.2% in December 2021. 

The overall National Consumer Price Index (NCPI) went up to 113.34 in December 2023 from 110.01 in December 2022.

The Food and Non-Alcoholic Beverages Inflation Rate for December 2023 fell to 2.3% from 9.7% in December 2022.

On the other hand, the Annual Inflation Rate for all items without food and non-alcoholic beverages for December 2023 increased to 3.3% from 2.9% in December 2022.

The Bank of Tanzania (BOT) explains that During 2022/23, policymakers across the globe were confronted with a challenging economic environment resulting from the war in Ukraine, climate change, and the lingering effects of the COVID-19 pandemic.

These global shocks disrupted the supply chain, leading to high commodity prices and inflation. To address the increase in inflation, BOT pursued a less accommodative monetary policy, which focused on striking a balance between the objective of containing inflation while safeguarding growth and financial stability.

The objective of BOT’s monetary policies is an inflation rate of 5% in the medium term, which is consistent with the East African Community (EAC) and Southern African Development Community (SADC) convergence criteria of a ceiling of 8% and a range of 3-7%, respectively.

This inflation target is considered appropriate to support sustainable growth of the economy.

BOT traditionally controlled inflation by managing the growth of the money supply. Extended broad money supply (M3), which is estimated to have the closest relationship with the rate of inflation, is used as an intermediate target variable. M3 comprises currency in circulation outside the banking system and deposits of residents with banks, including foreign currency deposits.

However, in January 2024 BOT announced it had transitioned to an interest rate-based monetary policy, effective the same month.

The policy shift moves away from the previous focus on controlling the money supply, aligning Tanzania’s economic management with regional practices and international standards. The move aims for enhanced economic stability and growth.

Tanzania Inflation Rate in 2022

In 2022 (January to December) the average annual headline inflation in Tanzania was 4.3%. In 2021 it was 3.7% and 3.3% in 2020.

In 2022, food inflation reached 7.3% versus 4.2% in 2021, while non-food inflation slightly fell to 3.2% from 3.5%.

Tanzania Inflation Rates in 2021

In 2021, the average annual headline inflation in Tanzania was 3.7% versus 3.3% in 2020.

The headline inflation declined dramatically in the last decade, from an annual average of 16% in 2012 to 3.7% in 2021.

Generally, the fall has been on account of improved food supply in the domestic market and neighboring countries, stability of global oil prices, and prudent fiscal and monetary policies.

The annual average inflation rate for food and non-alcoholic beverages has decreased to 4.2 % in 2021 from 4.8% recorded in 2020.

The annual average inflation rate for all items without food and non-alcoholic beverages in 2021 has also decreased to 3.5% from 3.7% in 2020.

Latest update: 12th June 2024

Sources: Bank of Tanzania (BOT, Tanzania National Bureau of Statistics (NBS), Tanzania Ministry of Finance, World Bank (WB).