Zambia inflation hits double digits for first time in 11 months
Zambia’s inflation rate returned to double digits for the first time in 11 months in April as a sharp depreciation in the kwacha in the last quarter fueled by slow progress in debt restructuring talks seeped into import prices.
Annual inflation quickened to 10.2% this month, from 9.9% in March, Statistician-General Mulenga Musepa told reporters Thursday in Lusaka, the capital. That’s 2.2 percentage points above the ceiling of the central bank’s target range.
The main drivers of the uptick were household appliances and motor vehicles, Musepa said. Food prices rose 11.6% from 11.8% in March and non-food inflation quickened to 8.3% from 7.3%. Prices rose 0.9% in the month, compared with 1% in March.
Africa’s first pandemic-era sovereign defaulter’s currency has whipsawed this year as investors await progress on talks to rework $12.8 billion in external loans to unlock a $188 million disbursement from the International Monetary Fund. The kwacha weakened 15% against the dollar in the first quarter before appreciating by a fifth this month, making it the world’s best performer among those tracked by Bloomberg.
Zambia’s official creditors, co-led by China, will meet next month and may sign a memorandum of understanding, a person with knowledge of the matter told Bloomberg last week, asking not to be identified because the information isn’t public.
The acceleration in inflation, upside risks from higher electricity tariffs for large users and the volatility in the currency may persuade the Bank of Zambia’s monetary policy committee to lift the key interest rate, which is at 9.25%, for a second time this year at its May 17 meeting.
