The month of July is coming to an end which means inflation numbers are out! This month has seen inflation increase by 20 basis points, rising from 8.6% in June to 8.8% in July as the consumer price index (CPI) subsequently increased during the period. The 8.8% reading is the highest on record since November 2016 as the 0.2% increase further pushes the country away from Bank of Zambia’s targeted 6-8% inflation band.
Breakdown of the inflation readings
Acting Director of the Central Statistics office, Goodson Sinyenga highlighted the increase in inflation to a rise in prices in both food and non-food items. The rise in prices of products such as bread, maize grain, breakfast, roller meal and imported rice all contributing to inflationary pressure as seen in the 0.1% increase in the segment, shifting from 9.2% in June to 9.3%. However, clothing and footwear which are within the non-food category rose 0.4%, rising from 6% to 6.4%. Inflation rate for alcohol beverages and tobacco also increased to 6.7% from 6.1% in June. Rises in the price of Pharmaceutical products such as paracetamol and aspirin contributed to a 0.2% increase in the inflation for health, moving to 7.1% from June’s 6.9% reading. Rising transport prices within the transport sector as a result of changes in the price of car batteries, CV joints and shock absorbers all contributed to the rise in monthly inflation.
We will be keeping a close eye on the inflation rate in the coming months as the developments within monetary policy i.e. the last policy rate hike in May and the forthcoming MPC meeting between 19th-20th August 2019 likely to shape the trajectory for inflation in the coming months. Stay tuned!