Zambia’s inflation rate fell for the first time in six months to 7 percent in January, giving the central bank room to keep interest rates unchanged.
Inflation slowed from 7.3 percent in December after the prices of some food prices fell, John Kalumbi, director of the Central Statistics Office, told reporters in the capital, Lusaka, today.
The government of Africa’s biggest copper producer has battled to contain inflation from higher food costs and a weaker currency. The central bank, which raised its benchmark interest rate by a quarter of a percentage point to 9.25 percent in October, is scheduled to make its next rate decision today.
Food prices rose 7.6 percent in January from a year ago, while non-food prices increased 6.3 percent, Kalumbi said.
Inflation will probably average 7 percent this year as the government “aggressively” targets this level, Nema Ramkhelawan-Bhana, an Africa strategist at FirstRand Ltd. (FSR)’s Rand Merchant Bank unit, said in a phone interview from Johannesburg before the data was released.
The kwacha has slumped 3.4 percent against the dollar since the beginning of the year. It was trading at 5,385 a dollar as of 10:27 a.m. in Lusaka.
Millers agreed to cut corn meal prices, the country’s staple food, after a Jan. 7 meeting with President Michael Sata. The central bank raised the reserve ratio for banks from 5 percent to 8 percent on Jan. 11 and capped the interest rates commercial lenders can charge at 18.25 percent in December.
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