(Bloomberg) -- Zambia’s inflation rate dropped below 10% for the first time in almost three years in June, bucking a global trend of record consumer-price growth..
Consumer prices rose 9.7% from a year earlier, compared with 10.2%% in May, interim Statistician-General Mulenga Musepa told reporters Thursday in Lusaka, the capital. The last time the southern African nation’s inflation rate was under 10% was in August 2019. Annual food-price growth slowed to 11.9% in June, compared with 12.3% in the previous month, and non-food inflation decelerated to 6.9% from 7.5%. Costs climbed 0.9% in the month.
Inflation surged toward the end of 2020 and peaked at 24.6% in the middle of last year. The acceleration was largely driven by a sell-off of the kwacha and its dollar-denominated debt after the nation became Africa’s first pandemic-era sovereign defaulter in November 2020.
Optimism over the nation’s economy since the election of Hakainde Hichilema as president in August, a potential debt restructuring and a $1.4 billion bailout package from the International Monetary Fund has seen a rally in the kwacha. That’s helped contain prices that are increasing due to supply-chain disruptions stemming from the war in Ukraine and intermittent Covid-19 lockdowns.
The kwacha has gained almost 33% against the dollar in the last 12 months, making it the second best performing currency after the Russian ruble.
The sustained slowdown in inflation may give the monetary policy committee room to hold rates and aid the economy’s rebound when it meets in August. Last month, the central bank projected inflation will average 12.5% this year and will decline toward its target range of 6% to 8% by the end of 2023.
The decision by Zambia to extend fuel waivers, that were due to end in this month, until September may help to mute price growth.
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