Inflation in Zambia, Africa’s biggest copper producer, accelerated to a six-month high in June, boosting the likelihood of a second consecutive interest-rate increase by monetary policy makers.
The rate rose to 7.3 percent from 7 percent in May, Peter Mukuka, acting director at the Central Statistics Office, told reporters today in Lusaka, the capital. Prices advanced 0.4 percent in the month.
Rising price pressures may give the central bank reason to raise its benchmark interest rate for the second month when its monetary policy committee meets tomorrow. The Bank of Zambia lifted the policy rate by 25 basis points to 9.5 percent in May to help meet a year-end inflation target of 6 percent.
Monetary policy makers may have scope for further tightening, Chris Becker, a Johannesburg-based African market strategist at ETM Analytics, said by phone.
“Rates may need to be hiked even faster in the future if they are not hiked tomorrow,” Becker said.
The land-locked country ended fuel subsidies from May 1, leading to a 21 percent increase in gasoline 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 country’s staple food at higher prices than it sells to private millers.