(Bloomberg) -- Zambia’s monetary policymakers may be persuaded to increase interest rates for a third time this year after inflation quickened to a 15-month high in July, stoked by a surge in the price of corn and other food staples.

Annual inflation accelerated to 10.3% from 9.8% in June, Statistician-General Mulenga Musepa told reporters in Lusaka, the capital, on Thursday. That was the highest level since April 2022. Food prices accelerated to an eight-month high of 12.1% in July from 11.2% in June on higher bread and cereal prices.

Governor Denny Kalyalya warned at the central bank’s last monetary policy committee meeting in May that higher corn prices, because of strong regional demand, and the impact of the prolonged Russia-Ukraine war on food costs remain key upside risks to the inflation outlook. 

Russia pulled out of an agreement that allowed Ukraine to ship grain through the Black Sea on July 17, and has since attacked infrastructure at Odesa region ports, as well as on the Danube river, pushing wheat prices to a five-month high. 

The cost of a 25 kilogram bag of breakfast corn meal, used to make Zambia’s staple food Nshima, surged 40% to 226.37 kwacha ($12.28) in July from a year earlier. Usually, the commodity costs much less at this time of the year due to a saturation of corn on the market post-harvest.

Volatility in the kwacha has also contributed to higher prices. The value has fluctuated sharply on foreign-exchange markets, driven by sentiment around the country’s debt restructuring.

It strengthened noticeably last month, making the cost of imports cheaper, as the country secured a deal in principle to restructure $6.3 billion of debt with bilateral creditors. The currency has since retreated from its recent peaks. 

The first African country to default on its debts during the Covid pandemic, Zambia is also in ongoing restructuring talks with holders of $3 billion in eurobonds. 

Zambia imports everything from fuel to fertilizer and exchange volatility has a significant effect on price growth. Non-food price growth was unchanged at 7.8%. Prices rose 0.9% in the month, compared with 0.8% in June.

The central bank, which targets inflation at 6% to 8% and expects it to average 10.5% will give its next rate decision on Aug. 23. The Ministry of Finance and National Planning separately projects economic growth to slow down to 2.7% from 4.7% recorded last year.

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