Inflation Drops To Three-Year Low As Zambia Bucks Global Trend

Zambia’s inflation rate dropped to single digits this month for the first time in almost three years, bucking a global trend which has seen record high consumer-price growth.  

Prices rose just 9.7% in June, compared to 10.2% in May, ZAMSTATS’ Statistician General Mulenga Musepa told reporters on Thursday. The last time Zambia’s inflation rate was under 10% was in August 2019.

Annual food-price growth slowed to 11.9% in June, compared with 12.3% the previous month. Non-food inflation, meanwhile, decelerated to 6.9% from 7.5%.

Since the New Dawn government took office in September 2021, inflation has more than halved: down from roughly 24% in August 2021. This deceleration means Zambians are more able to buy food and other essentials and also gives wages time to catch up. 

Optimism around Zambia’s economy, following Hakainde Hichilema’s election as President and a $1.4 billion bailout package from the International Monetary Fund, has seen a rally in the value of the Kwacha. The currency gained almost 33% against the dollar in the last 12 months, making it the second-best performing currency in the world. 

This has helped to contain price rises at a time when many countries are suffering due to supply-chain disruptions stemming from the war in Ukraine and intermittent Covid-19 lockdowns. 

The continued slowdown in inflation has also allowed the Bank of Zambia to hold interest rates, further boosting the economy’s recovery as businesses and families are able to borrow money more cheaply. Last month, the central bank’s monetary policy committee projected average inflation of 12.5% this year, declining towards its target range of 6% to 8% by the end of 2023.

The government’s decision to further extend its moratorium on fuel duty, which was due to end this month, until September is also expected to help drive down price growth and help families manage the cost of living.