Zambia's annual inflation rate dropped to 6.1% in September, marking the lowest level since February 2018 and fueling speculation about a potential fourth interest rate cut by the Bank of Zambia. The decline, the ninth consecutive month of easing inflation, was driven by slower food price growth, with food inflation easing to 5.8% from 6.0% in August. Non-food inflation remained stable at 6.6%, while a resilient local currency and temporary tax measures helped curb broader price pressures, according to data from Zambia’s Central Statistical Office. The Bank of Zambia has already reduced its policy rate three times this year as inflation moderated, but policymakers face a delicate balancing act. While the central bank seeks to stimulate economic activity through lower borrowing costs, the expiration of temporary tax relief—such as suspended fuel taxes and zero-rated VAT—on September 30 could reignite inflationary pressures. On a monthly basis, consumer prices rose 0.4% in September, the fastest increase in five months, with food and non-alcoholic beverages accounting for 54% of the consumer price index (CPI). Housing, utilities, and furnishings made up additional significant shares of household spending. Central bank officials emphasized that the continued moderation in annual inflation provides room for further monetary easing, but they will closely monitor the impact of expiring tax measures and the recent uptick in monthly price growth. The Bank of Zambia’s policy decisions will be critical in maintaining price stability while supporting economic recovery. Analysts noted that the central bank’s approach will depend on how quickly inflation responds to the removal of temporary supports and the broader economic outlook. The inflation data comes amid other developments, including Zambia’s planned launch of its first gold exchange-traded fund (ETF) in October and a surge in bond auction subscriptions following recent elections. These factors, alongside global economic trends, will shape the central bank’s strategy as it navigates the path to sustained price stability.
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Zambia inflation, Bank of Zambia, interest rates, economic policy, consumer prices
Zambia's annual inflation rate fell to 6.1% in September, the lowest since 2018, as the central bank considers a fourth rate cut amid mixed economic signals.
Zambia, inflation, interest rates, Bank of Zambia, economic policy
Zambia's 8-year low inflation rate of 6.1% in September raises hopes for a fourth rate cut, as the central bank weighs monetary easing against expiring tax measures and rising monthly prices.
https://www.businessdayng.com/zambias-eight-year-low-inflation-raises-hope-for-fourth-rate-cut
Zambia's 8-Year Low Inflation Sparks Fourth Rate Cut Hopes
Zambia's annual inflation rate dropped to 6.1% in September, the lowest since 2018, as the central bank considers a fourth rate cut amid mixed economic signals.