September inflation in Africa’s copper producer has extended its ebbing trajectory with the latest release by the Zambia Statistics Agency – ZSA at 230 basis points lower at 22.1%. According to a Zamstats report for September, annual inflation slowed on the back of a deceleration in food prices to 29.6% from 31.6% while non-food prices rose at a slower rate of 13.6% from 16.3%.
Zambia’s macroeconomic environment has seen a strengthening of currency by 16.7% to 15.9 for a unit of dollar after which it started to climb back and is shy of 17 for a unit of green buck. The appreciation was a key driver of an ease in costs for manufacturers that have passed somewhat lower prices to sellers. Lagged effects are expected to compress inflation lower for October readings while base effects have continued to play a contributory role.
Kwacha money markets will keep an eye on inflation as current levels still keep a greater portion of the yield curve underwater (>22.1%). The cost of living remains fairly high as autopsy effects of economic malaise persist. However post August polls the interest and exchange rate environment has rallied bullishly whose effects are forecast to ease inflation in the next coming months.
The Kwacha Arbitrageur