Inflation in Zambia falls significantly – lowest in 10 years

(Reuters) – Zambia’s inflation slowed to its lowest rate in at least 10 years this month, to 6.0 percent year-on-year from 6.4 percent in January mainly due to food costs, the Central Statistics Office (CSO) said on Thursday.

Zambia’s inflation has been on a declining trend and February’s rate marks the lowest since at least January 2002, according to all the available data on the CSO website.

“The reduction is mainly attributed to reductions in food and non-alcoholic beverages,” the CSO said in a statement.

Food has the heaviest weighting in the inflation basket and a bumper corn crop has led to lower prices of the staple in the southern Africa country.

An analyst said it will be a challenge to keep inflation at current rates.

“Higher electricity price will push the cost for services up and labor unions are already demanding higher wages,” David Punabantu, an analyst at the Economics Association of Zambia.

A Reuters poll on Wednesday showed Zambia’s inflation could rise over the next month but stay in single digits and average 7.2 percent this year.

The CSO also said Zambia’s trade account recorded a surplus of 269.3 billion kwacha (US$51 million) in January compared with a 475.9 billion kwacha (US$90 million) surplus in December 2011.