Inflation Reaches 12.5%

Zambia recorded an annual inflation rate of 12.5% in January 2020, up from 11.7% in December and the highest rate in almost three years. 

In 2019 inflation started at 7.9% but rose following increased food prices as a result of drought and a poor maize harvest. The current rate is double the Bank of Zambia’s target of between 6 and 8%.

According to the Zambia Statistics Agency Interim Statistician General Mulenga Musepa the increase since December is as primarily a result of the increase of the price on non-food products including electricity and petroleum.

FNB Zambia has projected that the annual rate of inflation is likely to continue to reach double-digits in 2020 following increases in electricity tariffs and fuel pump prices.

“Inflation is projected to remain elevated in 2020 due to increase in electricity tariffs and hike in fuel prices. With inflation being elevated, the central bank is certainly poised to continue with monetary policy tightening to control inflation,” FNB stated.

However, last week President Lungu stated that the annual rate of inflation is expected to be within the 6 to 8% target rate this year.

At the recent annual greeting of the diplomatic corps at State House, President Lungu stated, “At this juncture, I am happy to announce to your Excellencies that the economic prospects for 2020 are positive. Projections include a real growth rate of 3 per cent and inflation to be maintained within the range of 6 to 8 per cent. In addition, the fiscal deficit is expected to reduce to 5.5 per cent and domestic revenue mobilization is projected to increase to at least 22 per cent of Gross Domestic Product (GDP). Fiscal consolidation will continue to be a priority to ensure sustainable and inclusive growth.”