Tanzania’s inflation rate decreased slightly to 4.8 percent in February 2023, down from 4.9 percent in January 2023, said the monetary policy committee (MPC) of the Central Bank of Tanzania.
In a statement, the MPC attributed the rise in inflation to increases in prices of food, non-alcoholic beverages, and transportation.
“In January 2023, Mainland Tanzania inflation edged up to 4.9 percent, compared with 4.8 percent in the preceding month, but remained within the country’s target of 5.4 percent, and EAC and SADC regional benchmarks of 8 percent and 3-7 percent, respectively,” says the Bank of Tanzania (BoT).
At the same time, Zanzibar experienced an upward trend in inflation, reaching 8.4 percent in January 2023, mainly because of the increase in both food and non-food inflation.
The increase in inflation comes as Tanzania continues to recover from the economic impact of the COVID-19 pandemic while the ongoing war in Ukraine is blamed for causing an increase in import prices of consumer goods.
While the MPC provided inflation data from January 2023, the latest data sourced from the National Bureau of Statistics shows that inflation dropped slightly in February to 4.8%, keeping with expectations of the committee:
The MPC remains optimistic that inflation will remain within target in the second half of 2022/23, as prices of global consumer goods and inflation in trading partners ease, coupled with the expected increase in food supply in the country. The moderation will also be supported by cautious liquidity reducing monetary policy operations pursued by the Bank.
The country’s economic outlook is positive and expected to grow by 5% in the first quarter of 2023 following actual growth of 5.2 percent in the first three quarters of 2022 in Mainland Tanzania, the apex bank said.
Foreign reserves amounted to USD 4.8 billion at the end of January 2023, sufficient to cover 4.3 months of imports, in line with the country benchmark of at least 4 months of imports. According to local reports, the Tanzanian currency has continued to appreciate against the dollar in February 2023 compared to January 2023.
“The banking sector remained adequately capitalized, liquid and profitable in January 2023. Banks’ deposits and assets increased indicating improved economic activities, complemented by use of agent banking and digital financial services,” the MPC said.