Base effects slow June annual inflation to 7.4%

Zambia’s June annual inflation slowed 40bps to 7.4% as announced by the Central Statistics Office - CSO. The CSO attributed the decrease in the annual inflation rate to base effects which emerged from the adjustment in electricity tariffs in June 2017.This simply means that the drop is as a result of last year’s electricity price increase whose effect has now flattened on the year on year time series comparisons.

CSO Acting Director of Census and Statistics Goodson Sinyenga said the year on year inflation rate as measured by the all items consumer Price Index (CPI) for June 2018 decreased to 7.4% compared to 7.8% recorded in May 2018.

“This means that on average, prices of goods and services increased by 7.4% between June 2017 and June 2018,” he said. He stated that the increase in the annual food inflation rate is mainly as a result of price changes in maize and sugar. The year on year non-food inflation rate for June 2018 was recorded at 7.3% from 8.9% as at May 2018, indicating a decrease of 1.6%.

He further indicated that the monthly inflation for June 2018, was recorded at 0.2% compared to 0.4% recorded in May, representing a decrease of 0.2%.

“The monthly food inflation rate for June 2018 decreased to 0.3% compared to 4% recorded in May. The decrease in the monthly food inflation rate is mainly as a result of price changes for bread cereals food items such has cassava meal, buka buka, dried Siavonga kapenta,” He said.

Zambia’s macroeconomic fundamentals that include the exchange rate have relatively stabilized following the rise in global copper prices which have crossed the USD7,000 per tonne mark. Copper remains Zambia’s key export earner contributing over 70% of total country exports. Efforts to diversify the economy have always been echoed when red metal prices decline and are currently muted relative to the two years ago when the copper prices crested.