Inflation in Zambia, Africa’s biggest copper producer accelerated for the first time in five months in May after retail fuel prices increased by more than a fifth.
Consumer prices rose 7 percent compared with 6.5 percent in April, Goodson Sinyenga, acting director at the Central Statistics Office, told reporters today in Lusaka, the capital.
Zambia ended fuel subsidies from May 1, leading to a 21 percent increase in petrol prices and 22 percent jump in the cost of diesel. The state also plans to reduce subsidies for fertilizer for corn growers and said it will stop the practice of buying the crop at higher prices than it sells to private millers. Corn is a staple food in the country.
The central bank’s monetary policy committee meets tomorrow. The committee at its last meeting in April left the benchmark interest rate at 9.25 percent for a sixth time. The government is targeting 6 percent inflation by the year’s end.
Zambia’s decision to curb the fuel and corn subsidies will lead to higher prices, adding to inflationary pressures, Yvonne Mhango, a Johannesburg-based economist at Renaissance Capital, said by phone before the figures were released.
“I’d imagine we’d start to see food inflation start to pickup but that should only be a once-off,” Mhango said. “You will also probably see a pickup in non-food inflation in coming months.”