Zambia’s June inflation down to 7.8%
A woman sells tomatoes at a roadside grocery stall
LUSAKA (Reuters) – Zambia’s inflation slowed to 7.8 percent year-on-year in June versus 9.1 percent in May, mainly due to a lower food prices, the Central Statistical Office (CSO) said on Thursday.
Bank of Zambia Governor Caleb Funday said last month the southern Africa nation would likely achieve its target of 8 percent inflation by the end of the year despite higher fuel prices and a planned rise in electricity tariffs.
“The (June inflation) decline is attributed to the decrease in some food prices such as maize meal, maize grain, fresh vegetables and dried Kapenta (dried fish),” CSO said in a statement on Thursday.
It also said Zambia, a major producer of copper, registered a trade surplus of 762.9 billion kwacha in May compared with another surplus of 1.1 trillion kwacha in April.
Zambia harvested 2.7 million tonnes of white maize in 2009/2010, beating last season’s harvest of 1.9 million tonnes, to leave a surplus of 1.1 million of the staple grain, according to a government crop survey.
But although food prices have trended downwards, analysts see inflationary pressures from higher power costs, particularly if power utility Zesco is granted a 36 percent tariff increase.
“The 8 percent end-year inflation target may not be attainable because of an anticipated increase in energy costs,” said Chibamba Kanyama of economic think-tank, the Economic Association of Zambia.
“Pressure will also come from the depreciation of the kwacha which will result into higher fuel prices.
The kwacha has lost some ground against the dollar over the past few weeks, mostly due to global risk aversion, and was last bid at 5,165 on Thursday, off its strongest level this year of 4,370 in January.