Zambian inflation hits 26-month high as currency rout returns
Zambia’s annual inflation rate climbed to a 26-month high and may continue to increase as a record drought in parts of the country and renewed weakness in the currency lifts prices.
Consumer prices rose 13.8% in April, compared with 13.7% last month, Statistician-General Mulenga Musepa told reporters in Lusaka, the capital, on Thursday. Prices rose 1% in the month from 1.2% in March.
The kwacha has declined about 10% against the dollar since the start of March, making it the world’s second-worst performing currency over the period.
Demand for dollars has increased in Zambia partly because of an El Niño-induced drought that’s wiped out crops and forced the southern African nation to import more food. President Hakainde Hichilema this month made a formal appeal for emergency aid of about $900 million to deal with the affects of the dry spell.
Food inflation accelerated to 15.7% from 15.6% last month and non-food price growth was steady at 11.2%.
Lofty inflation and renewed currency weakness may persuade the Bank of Zambia’s monetary policy committee to raise the benchmark interest rate for a sixth successive meeting when it gives its decision on May 15.
The currency is likely to face further pressure from plans to import electricity because of plunging hydropower-dam levels and 650,000 tons of corn due to a shortfall of the grain. It plans to start imports month-end and has allowed the private sector to ship non-genetically modified yellow and white corn.
State-owned power utility Zesco is in talks for additional electricity imports that will be strategically allocated to crucial sectors including mining, agriculture and manufacturing to support economic stability and growth, the utility said Monday.
