Zambia inflation quickens to 16-month high on food, fuel prices
Zambia’s inflation accelerated to a 16-month high in August, a week after the central bank increased its benchmark interest rate for the third time in a row to contain price growth pressures that are predicted to persist through to the first half of 2025.
Annual inflation quickened to 10.8% from 10.3% in July, Statistician-General Mulenga Musepa told reporters in Lusaka, the capital, on Thursday. That’s the highest level since April 2022.
The acceleration was broad-based. Food inflation in Africa’s second largest copper producer accelerated to 12.6% in August from 12.1% last month on higher cereal, meat and fish prices. Non-food price growth surged to 8.5% from 7.8% because of rising spare parts, fuel and lubricant costs. Prices rose 0.8% in the month.
The central bank, which targets inflation at 6% to 8%, expects it to average 10.2% this year and 9.3% in both 2024 and the first half of 2025.
Volatility in the kwacha, driven by sentiment around the country’s debt restructuring and dwindling copper production, its main export earner, has contributed to rising prices. Zambia imports everything from fuel to fertilizer which means exchange rate weakness has a significant impact on prices.
The currency has depreciated 5.4% this month against the dollar, with last week’s half-point rate hike doing little to arrest the decline.
Africa’s first pandemic-era sovereign defaulter will meet private bondholders to rework $3 billion in eurobonds next month and is yet to sign a memorandum of understanding with bilateral creditors after securing a deal in principle to restructure $6.3 billion of debt in June.
