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Zambia’s Inflation Rate Returns to Double Digits in April 2023

Zambia’s inflation rate has reached double digits again after 11 months, due to the sharp depreciation of the kwacha in the last quarter and slow progress in debt restructuring. The annual inflation rate in Zambia rose to 10.2% in April 2023 from 9.9% in March, crossing the central bank’s target range of 6%-8% by 2.2 percentage points.

The rise in inflation was driven by an increase in food prices, which rose to 11.6% from 11.8% in March, while non-food products increased to 8.3% from 7.3% in March, according to official statistics. Lusaka province had the highest contribution to the inflation rate at 3.4 percentage points, followed by Copperbelt and Central provinces at 1.9% and 1.0%, respectively. Eastern and Southern provinces contributed 0.9 percentage points each, while North-western province had the lowest contribution of 0.3 percentage points.

Experts predict that inflation acceleration, potential upside risks from higher electricity tariffs for large users, and currency volatility may lead the Bank of Zambia’s monetary policy committee to increase the key interest rate, currently at 9.25%, for a second time in May 2023. On a monthly basis, consumer prices increased by 0.9% in April, compared to a 1.1% increase in March. The monthly inflation rate for April 2023 was recorded at 0.9%, lower than the previous month’s 1.0%, mainly due to price decreases in selected food items.

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