Zambia Inflation Holds at a Three-Year High

Zambia’s inflation rate remained at a three-year high in October and economic growth slowed, complicating the central bank’s task.

Annual consumer inflation accelerated to 10.7% from 10.5% in September, Mulenga Musepa, the interim statistician general at the Zambia Statistics Agency, told reporters Thursday in the capital, Lusaka. That’s the fastest rate of price growth since October 2016. The economy of Africa’s second-largest copper producer expanded 2.2% in the three months through June, the slowest since at least the first quarter of 2016, when the agency started compiling quarterly data.

In his annual speech to open parliament last month, President Edgar Lungu said climate change was partly to blame for the nation’s growing economic troubles. The worst drought in almost four decades in the southwest of the country has caused crop failure and drastically curbed output at the hydropower dams that Zambia relies on for about 80% of its electricity generation. In the northeast, floods washed away bridges and also damaged crops. That has pushed up food and fuel prices and weigh on the economy.

The government has halved its 2019 economic-expansion forecast to 2%, the lowest level this millennium and less than population growth, compared with 4% last year. The International Monetary Fund projects growth will slow even further in 2020, to 1.7%.

Governor Denny Kalyalya warned in August that the central bank could raise interest rates again if inflation doesn’t return to the target band of 6% to 8%. The Monetary Policy Committee kept the key rate on hold in at its August meeting after bucking the global trend in May by tightening by 50 basis points. The next policy announcement is scheduled for Nov. 20.