Zambian Inflation Jumps to 18-Year High on Meat and Fish Prices

Zambian inflation accelerated to an 18-year high in May as the cost of meat and fish pushed up food prices.

Consumer prices rose 23.2% from a year earlier, compared with 22.7% in April, according to Zambia’s interim statistician-general, Mulenga Musepa. Costs increased 2% in the month. Annual food inflation quickened to 28.5% in May from 27.2% a month earlier.

Inflation that has been above the upper bound of the central bank’s target range of 6% to 8% for more than two years is expected to stay there until at least the first quarter of 2023. While the central bank said last week price-growth pressures will ease faster than earlier anticipated, Governor Christopher Mvunga warned the monetary policy committee may tighten its stance further if the rate doesn’t come down.

Zambian Inflation Jumps to 18-Year High on Meat and Fish Prices

The panel left its benchmark interest rate at 8.5% after hiking by 50 basis points in February.

Read more: Zambia Central Bank Holds Key Rate, Warning It May Tighten Again

While the kwacha remains among the worst-performing African currencies tracked by Bloomberg and has added to inflation, the rate of depreciation slowed this year, compared with the same period in 2020.

A deal with the International Monetary Fund that is crucial to Africa’s first pandemic-era sovereign defaulter’s plans to restructure as much as $12.7 billion external debt and boost foreign-exchange reserves could improve the kwacha’s outlook and ease inflationary pressures.

“Significant changes in the currency’s trajectory are only likely to materialize post an IMF deal,” Neville Mandimika and Daniel Kavishe, analysts at FirstRand Ltd.’s Rand Merchant Bank in Johannesburg said this week in a client note.

The nation had hoped to reach a deal before general elections on Aug. 12.

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