INFLATION for April in Africa’s second largest copper hotspot edged 30bps higher to 7.4% due to lagged cost push effects of the fuel price hike. The Central Statistics Office announced in the capital on 26 April. The Energy Regulation Board – ERB adjusted pump prices that resulted in higher transportation and production costs in March. The Bank of Zambia targeted inflation band is 6-8% which is slowly coming under threat. Inflation in Zambia has become a topical issue because it has made real yields on Kwacha assets very attractive.
Zambia’s treasury bills and bonds are priced fairly attractive between 13%-20% and given an inflation rate of 7.4% the premiums are still fairly wide. International crude prices continue to threaten single digit inflation as the likes of Saudi Arabia target USD80/bbl. – USD100/bbl. oil in the medium term which could put the copper producing and crude importing nation under pressure. With oil trading for USD73/bbl – 7.43% higher from the last pump price review analysts forecast a price review very soon. However with good rainfall recorded this year, crop harvests are still expected to be bumper creating a food inflation hedge for the 55% of the Consumer Price Index – CPI.
More articles on Zambia’s inflation.