Zambia Inflation Quickens for 8th Straight Month

Zambian inflation accelerated for an eighth straight month in November to the highest rate in three years as a drought pushed up food prices and rapid depreciation of the currency made imports more expensive.

Annual consumer inflation quickened to 10.8% from 10.7% in October, Mulenga Musepa, the interim statistician general at the Zambia Statistics Agency, told reporters Thursday in the capital, Lusaka. That’s the highest rate since October 2016. Prices rose 1% in the month.

Zambia's inflation rate is at the highest in three years.

Key Insights

The level of price growth may keep the pressure on Zambia’s central bank, which targets inflation in a range of 6% to 8%, to increase its benchmark lending rate again after raising it to 11.5% from 10.25% last week. The kwacha has fallen more than 18% against the dollar this year after a drop in the production and price of copper, which the nation relies on for about 70% of export earnings.

A severe drought in Zambia’s southwest has slashed output at the hydropower plants that the country relies on for about 80% of its electricity generation and the blackouts resulting from that last more than 18 hours a day.

The power cuts also mean that many businesses run on generators, increasing their input costs because the kwacha’s depreciation against the dollar this year has pushed up fuel prices. The nation’s power utility, Zesco ltd. has asked the energy regulator to allow it to more than double prices, which will add to inflationary pressure.