THE Bank of Zambia (BoZ) has announced that the country’s annual overall inflation accelerated to a five-year high averaging 22.2 percent in the first quarter of 2021.
This is compared to 17.6 percent recorded the previous quarter.
BoZ Governor Christopher Mvunga attributed the development to the depreciation of the Kwacha and the low seasonal supply of fish and some vegetables largely accounted for this outturn.
He said food inflation rose sharply to 27.0 percent from 17.2 percent while non-food inflation declined to 16.6 percent from 18.0 percent.
In April, overall inflation marginally declined to 22.7 percent from 22.8 percent in March.
“While inflation is projected to remain above the upper bound of the 6-8 percent target range over the next eight quarters, inflationary pressures are now expected to subside more quickly than envisaged in the February MPC Meeting.
“This is mostly on account of the excess supply of maize in view of a good crop harvest, higher copper prices and improved external financing. Inflation is projected to average 21.9 percent and 16.7 percent in 2021 and 2022, respectively,” he said.
The central bank head noted that elevated fiscal deficits, higher crude oil prices, and rising inflation in some major trading partner countries are the key sources of inflationary pressures over the forecast period.
However, He said that these are expected to be mitigated somewhat by significantly higher copper prices.
“Over this period, the key upside risk to inflation is the possible increase in energy prices (fuel pump prices and electricity tariffs) and any resurgence of the COVID-19 infections following the advent of the new variants,” he said.