The inflation rate in Tanzania has edged up to 3.50% YoY in November 2025, marking a modest increase from 3.40% in October and surpassing the 3.30% consensus estimate. Over the past seven months, inflation has hovered between 3.20% and 3.50%, reflecting relative price stability amid moderate economic growth. This level remains below the central bank’s inflation target band of 3.50% to 5.00%, signaling contained inflation pressures but with emerging upside risks.

Drivers this month

• Food prices contributed 0.12 percentage points to the rise, driven by seasonal supply constraints.
• Energy costs added 0.08 percentage points, reflecting global oil price volatility.
• Transport and logistics inflation increased by 0.05 percentage points due to higher fuel costs.

Policy pulse

The Bank of Tanzania’s benchmark policy rate remains at 7.00%, consistent with efforts to balance growth and inflation control. The current inflation reading sits just at the lower edge of the target range, providing room for a steady monetary stance but warranting vigilance if upward momentum persists.

Market lens

Immediate reaction: The Tanzanian shilling (TZS) depreciated marginally by 0.10% against the USD within the first hour post-release, while 2-year government bond yields rose by 5 basis points, reflecting mild inflation concerns among investors.

Examining core macroeconomic indicators alongside inflation reveals a nuanced picture of Tanzania’s economic health. GDP growth for Q3 2025 was reported at 4.80% YoY, slightly below the 5.00% average of the past two years but still robust. Unemployment remains steady at 9.20%, while wage growth has accelerated modestly to 4.10% YoY, supporting consumer spending.

Monetary policy & financial conditions

The Bank of Tanzania has maintained a cautious monetary policy, keeping the policy rate steady at 7.00% since mid-2025. Liquidity conditions remain ample, with broad money supply (M3) growing at 8.50% YoY, supporting credit expansion. Inflation expectations are anchored near 4%, consistent with the central bank’s target.

Fiscal policy & government budget

The government’s fiscal stance remains moderately expansionary, with a budget deficit of 4.20% of GDP projected for 2025. Increased public investment in infrastructure and social programs is expected to support medium-term growth but may add inflationary pressures if not matched by productivity gains.

External shocks & geopolitical risks

Global commodity price fluctuations, particularly in oil and food, continue to influence Tanzania’s inflation trajectory. Regional geopolitical tensions have so far had limited direct impact but pose potential risks to trade and investment flows.

The inflation trajectory suggests mild but persistent upward pressure, driven by supply-side factors and external cost shocks. The steady rise in energy and food prices, combined with wage growth, underpins this trend.

Market lens

Immediate reaction: Following the inflation release, the TZS/USD exchange rate weakened slightly, while bond yields climbed, reflecting investor caution. Inflation-linked securities saw increased demand, signaling expectations of further inflation moderation.

Looking ahead, Tanzania’s inflation outlook balances upside risks from external shocks and fiscal expansion against downside risks from monetary discipline and stable commodity prices. We outline three scenarios:

Bullish scenario (30% probability)

• Global commodity prices stabilize or decline, easing cost pressures.
• Monetary policy remains steady, anchoring inflation expectations.
• Inflation moderates to 3.00%–3.20% by mid-2026, supporting real income growth.

Base scenario (50% probability)

• Inflation remains near current levels, fluctuating between 3.40% and 3.60%.
• Moderate fiscal expansion continues without triggering overheating.
• Monetary policy adjusts cautiously if inflation breaches 4.00%.

Bearish scenario (20% probability)

• External shocks push energy and food prices higher.
• Fiscal deficits widen, fueling demand-pull inflation.
• Inflation rises above 4.50%, prompting tighter monetary policy and currency volatility.

Policy pulse

The Bank of Tanzania is likely to maintain a data-dependent approach, with potential rate hikes if inflation accelerates beyond 4.00%. Fiscal authorities face pressure to balance growth objectives with inflation containment.

Tanzania’s inflation rate of 3.50% YoY in November 2025 signals a modest uptick but remains within manageable bounds. The interplay of stable monetary policy, moderate fiscal expansion, and external price shocks will shape inflation dynamics in the near term. Vigilance is warranted as inflation edges closer to the upper target band, with implications for interest rates, currency stability, and consumer purchasing power.

Structural factors such as improving productivity, diversification of the economy, and enhanced supply chain resilience will be critical to sustaining low inflation over the long run. Policymakers must balance short-term inflation control with support for inclusive growth.

Key Markets Likely to React to Inflation Rate YoY

The inflation rate in Tanzania influences several key markets, including currency pairs, government bonds, and equities sensitive to inflation trends. Monitoring these assets provides insight into market sentiment and economic expectations.

• TZSUSD: The Tanzanian shilling’s exchange rate against the US dollar reacts directly to inflation shifts, affecting import costs and capital flows.
• DSE: The Dar es Salaam Stock Exchange reflects investor confidence and inflation-adjusted earnings prospects.
• BTCUSD: Bitcoin’s role as an inflation hedge attracts interest during periods of rising inflation globally.
• EURUSD: Euro-dollar dynamics influence Tanzania’s trade and investment environment indirectly through global financial conditions.
• NSE: The Nairobi Securities Exchange, as a regional market, often moves in tandem with Tanzania’s economic indicators.

Insight: Inflation Rate vs. TZSUSD Exchange Rate Since 2020

Since 2020, Tanzania’s inflation rate and the TZSUSD exchange rate have shown a moderate inverse correlation. Periods of rising inflation generally coincide with TZS depreciation, reflecting reduced purchasing power and capital outflows. For example, the inflation spike in late 2023 corresponded with a 6% TZS depreciation against USD. The current inflation stability near 3.50% aligns with a relatively stable TZS, suggesting market confidence in monetary policy effectiveness.

FAQs

What is the current inflation rate YoY for Tanzania?

The latest inflation rate YoY for Tanzania is 3.50% as of November 2025, slightly above the previous 3.40% reading.

How does Tanzania’s inflation compare historically?

Inflation has remained stable between 3.20% and 3.50% over the past seven months, below the 5.00% peak seen in late 2023.

What are the main risks to Tanzania’s inflation outlook?

Upside risks include rising global commodity prices and fiscal expansion, while monetary policy and supply improvements offer downside support.

Takeaway: Tanzania’s inflation is rising modestly but remains manageable, with policy vigilance key to sustaining price stability amid external uncertainties.

This has been drafted with AI assistance and then thoroughly reviewed, refined, and approved by our human editorial team to ensure accuracy, and originality.

Updated 11/13/25