Zambia’s annual inflation rate rose to an almost two-year high amid the ongoing depreciation of its currency, piling pressure on monetary policymakers to act when they meet next month.
The consumer price index jumped to 13,2 percent in January, compared with 13,1 percent the month before, Statistician-General Mulenga Musepa told reporters in Lusaka, the capital,last week. Monthly inflation quickened to 2,1 percent, the fastest pace in a year.
The kwacha has weakened around 34 percent against the dollar since July and is among the world’s worst-performing currencies so far this year, despite various policy measures to halt its slide.
They include introducing new regulation from January 1 requiring exporters to have accounts domiciled in Zambia to get paid for their exports, raising interest rates by 200 basis points last year to 11 percent and increasing the reserve-ratio requirements for lenders several times.
The slump in the currency is being stoked by lower copper production, the southern African nation’s main foreign-exchange earner, and weaker metal prices.
A standoff among its creditors that’s stalled efforts by the continent’s first pandemic-era sovereign defaulter to restructure its debt has also contributed.
Persistent inflation and relentless currency weakness may persuade the Bank of Zambia’s monetary policy committee to lift the benchmark rate for a fifth time in a row when it gives its decision on February 14, 2024.
The main driver of the uptick in inflation was non-food price growth. It accelerated to 12,4 percent, compared with 11,6 percent in December. Food inflation, likely due to seasonal factors, eased to 13,7 percent in January from 14,2 percent last month, Musepa said.