Zambia Inflation Slows as Food-Price Growth Retreats From Record

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Zambian inflation slowed to an eight-month low in September after food-price growth decelerated from a record high and the currency’s two-month world-beating streak helped curb import costs. Consumer prices rose 22.1% from a year earlier, compared with 24.4% in August, Zambia’s interim statistician-general, Mulenga Musepa, told reporters Thursday in Lusaka, the capital.

Costs fell 0.5% in the month. Food-price growth slowed to 29.6% in September, compared to 31.6% in the prior month, and non-food inflation decelerated to 13.6% from 16.3% in August. The slowdown in inflation that has been above the 8% upper limit of the central bank’s target band for more than two years could ease pressure on the monetary policy committee to tighten and give it room to support the economy’s recovery when Governor Denny Kalyalya chairs his first meeting in November since being reappointed on Monday.

The central bank held its key interest rate at its most recent monetary policy committee meeting and projects inflation will decelerate faster and edge closer to the target range of 6% to 8% sooner than expected at its previous gathering.

The MPC sees price growth averaging 22.6% this year, 15.5% in 2022 and 11.9% in the first half of 2023.

The main risks to inflation include energy costs and the kwacha that weakened almost 5% in September against the dollar after a two-month world-beating streak.

The Finance Ministry expects the economy to grow 1.6% this year, compared with the International Monetary Fund’s forecast of 0.6% expansion, after contracting the most in more than two decades in 2020 to 2.8%. Gross domestic product expanded 8.1% in the second quarter from a year earlier.

©2021 Bloomberg L.P.

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