Zambia Consumer Prices Climb Most Since 2003 as Kwacha Slides

  • Economy under pressure following plunge in copper prices
  • Central bank raised interest rates by record 300 basis points

Consumer prices in Zambia rose the most in more than 12 years in December as the currency extended its decline and the government boosted electricity costs.

The inflation rate rose to 21.1 percent from 19.5 percent in November, the Central Statistical Office said in a report on Thursday in the capital, Lusaka. Prices increased 2.1 percent in the month.

Zambia’s economy is under strain after a plunge in copper prices to near six-year lows triggered a 42 percent slump in the currency against the dollar this year. The metal makes up more than 70 percent of Zambia’s exports. The government earlier this month more than halved its growth forecast for 2015 to about 3 percent.

The Bank of Zambia raised its benchmark interest rate by a record 3 percentage points to 15.5 percent in November to combat inflation. The government had targeted an inflation rate of 7 percent for the end of this year.

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