Zambian Inflation Accelerates to 6-Year High After Kwacha Slumpsby
Power crisis, world's worst-performing currency boost prices
Statistics office says `greedy businesses' exploit situation
Zambia consumer prices accelerated by the most in six years, pushed higher by a currency plunge and the southern African nation’s worst power crisis on record.
Yearly inflation quickened to 14.3 percent in October from 7.7 percent the previous month, John Kalumbi, director at the Central Statistical Office, told reports in Lusaka, the capital.
“The surge in inflation follows the rapid depreciation of the kwacha exchange rate,” Irmgard Erasmus, an economist at NKC African Economics, said in reply to e-mailed questions. “The power crisis, and resultant increase in regulated costs, also fueled increases in input costs, and we subsequently expect further pressure on both food and non-food price inflation due to indirect and second-round effects.”
Zambia’s currency has dropped 49 percent against the dollar this year, making it the world’s worst performer. Falling prices of copper, which accounts for 70 percent of Zambian exports, and the power shortage have disrupted the economy. The country is struggling to meet half of peak power demand as low water levels at hydropower dams curtail generation.
Monthly inflation accelerated to 6.2 percent in October from 0.7 percent in in September. While the power shortage and currency slump may have played a role, the jump was mainly the result of businesses exploiting the drop in the kwacha, the statistics office’s Kalumbi said.
“It was purely speculation and greediness” on the part of businesses that increased their prices, as not all products are imported, he said.