According to the latest Monetary Policy Committee (MPC) Statement released by the Central Bank of Tanzania, Tanzania’s inflation is expected to remain low for the remainder of the year. This expectation is based on several factors.
Firstly, there is an anticipated further decline in food and energy prices in the global market. The statement highlights that global inflation has been easing since the last quarter of 2022, driven by a decrease in energy prices. Additionally, commodity prices in the global market have declined, although they remain above pre-war levels in Ukraine. These factors are expected to contribute to a continued decline in inflation.
Secondly, the MPC emphasizes implementing a less accommodative monetary policy in Tanzania. This policy has successfully contained inflation within the target range while ensuring sufficient liquidity in the banking system to support credit intermediation and economic activities. The less accommodative monetary policy stance is expected to contribute to the stability of inflation rates.
Furthermore, favorable weather conditions are anticipated to improve the food supply in Tanzania. Improved food production and supply can help alleviate upward pressure on prices and contribute to lower inflation.
It is important to note that the MPC statement indicates that inflation in Mainland Tanzania eased for the third consecutive month to 4.3 percent in April 2023, remaining below the target of 5.4 percent for the 2022/23 period. However, inflation in Zanzibar rose to 7.5 percent in April 2023, above the medium-term target of 5 percent, primarily due to increased food prices.
Overall, based on the factors mentioned above, including the expected decline in global food and energy prices, the less accommodative monetary policy, and improved food supply due to favorable weather, Tanzania’s inflation is projected to remain low for the rest of the year.