In November, Zambia witnessed a sharp surge in inflation, reaching a 20-month high, mainly propelled by a substantial depreciation of the kwacha. This decline in currency value led to increased costs of imported goods like cereals, vehicles, and spare parts.
Mulenga Musepa, the Statistician-General, revealed that consumer prices soared by 12.9% compared to the previous year, up from October’s 12.6%. This notable rise, the highest since March 2022, was accompanied by a 0.9% increase within the month alone.
The kwacha has faced a depreciation of over 20% since July due to a scarcity of dollars, partially linked to reduced copper production—a key foreign exchange earner.
This depreciation worsened due to low metal prices and complications stemming from debt negotiations. Recent attempts to restructure $3 billion of outstanding notes encountered obstacles when China, France, and other official creditors rejected a revised proposal for bondholder restructuring.
Despite the central bank’s recent efforts to stabilize the currency—such as raising interest rates by 100 basis points to 11% and increasing reserve-ratio requirements for lenders from 14.5% to 17%—the downward trend of the currency remains largely unabated.
The continued depreciation might prompt the central bank to consider further adjustments to interest rates in the coming year.
Food inflation accelerated to 13.7% in November from the previous month’s 13.6%, while non-food prices surged to 11.8% from 11.3% in October. Typically, inflation data is collected during the initial ten days of each month.