Zambia Inflation Slows For the First Time in 15 Months

(Bloomberg) --

Zambian inflation slowed for the first time in 15 months in June as the kwacha pared some earlier losses.

Consumer prices increased 15.9% from a year earlier, compared to 16.6% in May, Mulenga Musepa, the interim statistician general at the Zambia Statistics Agency, told reporters Thursday in Lusaka, the capital. Costs rose 0.2% in the month.

Key Insights

• While inflation has been above the central bank’s target band of 6% to 8% for 14 months now, the Bank of Zambia expects the rate of price growth to trend lower to the upper end of the range by the end of its two-year forecast horizon. That, and a more stable currency, may create some room for the central bank to support an economy that the statistics office said grew 1.4% last year, compared with 4% in in 2018,
• While the kwacha gained 1.2% against the dollar in June, its total drop for the year to date is 22%, making it the worst-performing currency in Africa. The unit has come under increased pressure as the economic fallout from the coronavirus pandemic increases the chances of a debt default. The southern African nation has written to the Paris Club requesting a suspension of its principal and interest payments to its official creditors.
• The government said on Wednesday the International Monetary Fund’s staff had been granted a mandate to discuss an economic program for Zambia. The country’s growing debt burden has been a hurdle to accessing emergency coronavirus funding from the lender.

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