Zambia’s inflation falls to 3-year low, returns to single digits

Zambia’s annual inflation rate eased to single digits in January for the first time in three years, strengthening the case for further monetary easing as price pressures continue to moderate.

Data from the central statistical office shows that consumer prices in the copper-rich Southern African nation eased to 9.4 percent in January from 11.2 percent in December. The reading marks the first time inflation has fallen below 10 percent since January 2023.

Sheila Mudenda, acting statistician-general, said on Wednesday the slowdown reflects easing price pressures across both food and non-food components.

Annual food inflation declined to 10.9 percent in January from 12.9 percent a month earlier, while non-food inflation slowed to 7.3 percent from 8.7 percent. Month-on-month inflation stood at 0.5 percent.

Data from Trading Economics shows that the country’s inflation rate has averaged about 11.2 percent between 2005 and 2026, peaking at 24.6 percent in June 2021 and falling to a record low of 6 percent in December 2011.

The continued deceleration in inflation is likely to bolster expectations that the Bank of Zambia will extend its easing cycle when it meets in February. In November, the central bank cut its policy rate by 25 basis points to 14.25 percent — its first rate cut since August 2020.

Despite the recent improvement, inflation remains above the central bank’s target range of six to eight percent, which it has exceeded consistently since May 2019. The downward trend briefly stalled in December before resuming in January.

Currency strength has also helped contain price pressures. The kwacha, Africa’s second-best performing currency last year, has gained about 16 percent against the US dollar since December. The rally has been driven by central bank measures restricting foreign-currency use in domestic transactions and a surge in copper prices.

Copper, which accounts for more than 70 percent of Zambia’s export receipts and roughly a quarter of government revenue, has climbed to record highs amid supply disruptions at major mines and global ore shortages.

On Tuesday, the International Monetary Fund’s executive board approved a disbursement of about $190 million to Zambia, marking the conclusion of its current financing programme and clearing the path for discussions on fresh support

Bunmi holds a degree in Economics from the University of Lagos and has over eight years of experience in content writing and journalism.

Her career spans roles as a financial and business journalist at BusinessDay Media and TechCabal, and as Head of Research at SBM Intelligence, an Africa-focused market intelligence and strategic consulting firm.

She also served as Editor at Finance in Africa, a subsidiary of Businessfront and is currently Assistant Editor, Finance (Africa), at BusinessDay.

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