Zambian Inflation Accelerates for Second Straight Month

(Bloomberg) -- Zambian inflation accelerated for the second straight month in October.

Consumer prices rose 16% from a year earlier, compared with 15.7% in September, Mulenga Musepa, the interim statistician general at the Zambia Statistics Agency, said in a virtual briefing. Costs increased 1.3% in the month.

The increase in the headline rate was mainly due to higher food prices, Musepa said. Annual food inflation quickened 14.6% in October from 14% a month earlier. Price growth has been above the central bank’s target band of 6% to 8% for more than a year and a half and may accelerate due to the continued depreciation of Zambia’s currency.

Zambia’s kwacha is the worst-performing currency on the continent this year, falling more than 30% to the dollar. In addition to fueling inflation, it’s driven up external debt-servicing costs, raising the risk of a default.

S&P Global Ratings cut its assessment of Zambia’s debt to selective default, the first such rating for the southern African nation after it said it couldn’t meet payments and skipped a coupon on its $1 billion Eurobond on Oct. 14.

Zambia, the first African country to ask bondholders for relief since the onset of the coronavirus, is seeking to defer interest payments on its $3 billion worth of Eurobonds until April as it battles the economic contraction and liquidity squeeze caused by the pandemic. The vote on the standstill request will be held on Nov. 13.

The country to date has recorded in excess of 16,000 Covid-19 cases and nearly 350 deaths.

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