Zambian Inflation Advances to Three-Year High as Vote Looms

Zambian consumer inflation advanced the most in three years in November, validating the central bank’s decision to raise its key lending rate to a record.

Annual inflation accelerated to 8.1 percent from 7.9 percent a month earlier, the Lusaka-based Central Statistical Office said in an e-mailed statement today. The Bank of Zambia raised its benchmark rate by 50 basis points to 12.5 percent on Nov. 19 and Governor Michael Gondwe warned inflation would remain at “elevated levels” into 2015.

While elections planned for Jan. 20 could spur inflation as government spending grows, “a relatively small lead-up likely mitigates risks of sustained deterioration on this front,” Raza Agha, economist at London-based VTB Capital said in an e-mailed response to questions.

Consumer-price growth will ease as the country benefits from a record corn harvest and tight monetary policy, Amsterdam-based Mantis BV said in an e-mailed note on Nov. 24.

Monthly inflation accelerated to 0.4 percent in November, from 0.1 percent, the statistics office said. Prices in November increased for items ranging from fish to vehicles, it said.

Zambia, Africa’s biggest copper producer after the Democratic Republic of Congo, will elect a new president in January to replace Michael Sata, who died in London last month.

“The ruling party will likely make popular concessions during the campaign that undermine fiscal restraint, particularly on the public-sector wage freeze,” Clare Allenson, a London-based analyst at Eurasia Group, said in an e-mail.

(An earlier version of this story corrected the size of the interest rate increase in the second paragraph.)

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