Zambia inflation hits 15-month high as food costs soar
Zambia’s inflation quickened to a 15-month high in July on higher food costs such as corn meal and currency volatility.
Annual inflation accelerated to 10.3% from 9.8% in June, Statistician-General Mulenga Musepa told reporters in Lusaka, the capital, on Thursday. That was the highest level since April 2022.
The kwacha’s value has fluctuated sharply on foreign exchange markets, driven by sentiment around the country’s debt restructuring.
It strengthened sharply last month, making the cost of imports cheaper, as the country secured a deal in principle to restructure $6.3 billion of debt with bilateral creditors. The currency has since pared those gains and depreciated 5% this month.
The first African country to default on its debts during the Covid pandemic, Zambia is also in ongoing restructuring talks with holders of $3 billion in Eurobonds.
Zambia imports everything from fuel to fertilizer and exchange volatility has a significant effect on price growth.
The pickup in inflation may prompt the central bank’s monetary policy to raise rates for a third time this year when it meets next month.
Food prices accelerated to an eight-month high of 12.1% in July from 11.2% in June on higher bread and corn meal prices. The cost of breakfast corn meal, used to make Zambia’s staple food Nshima, surged 40% in July from a year earlier. Non-food price growth was unchanged at 7.8%. Prices rose 0.9% in the month, compared with 0.8% in June.
The central bank, which targets inflation at 6% to 8%, expects it to average 10.5% this year. The Ministry of Finance and National Planning separately projects economic growth to slow down to 2.7% from 4.7% recorded last year.
