Economy Editor's Picks

Dynamics on inflation rate may begin to change going forward – Economist

• Last year this time the inflation rate was at 24.4%.
• With increased economic activities, economic growth objectives are likely to be met.
• IMF bailout package and debt restructuring will be a game changer

An Economist says dynamics on the inflation rate may begin to change going forward, which pose some possibility of upward movement in the inflation rate.
Speaking to Money FM News, Emmanuel Zulu said this can be due to a possible increase in Aggregate Demand as Government raises its expenditure on the wage bill and consumption, funding of Citizens Economic Empowerment Commission (CEEC) and Constituency Development Fund (CDF) projects as well as increased inflows.
Mr. Zulu explained that on the downside aspect of a stronger currency, the country risks increasing the appetite for imports since Zambia’s industrial base is yet to be satisfying the local market ,hence giving a higher net import value, which may trigger an upward shift in the Aggregate Demand over time.
“These factors over time my trigger an upward shift in the Aggregate Demand and we may see inflation rate moving towards a double digit. Nonetheless, with increased economic activities, economic growth objectives are likely to be met,” Mr. Zulu said.
He however commended government for continuing on the path of single digit inflation rate through various interventions.
“Last year this time the inflation rate was at 24.4%.We have seen the deliberate interventions to bring the inflation rate to normalcy such as ensuring the Kwacha performance is strong against major convertibles, thus making imports cheaper, strictly monitoring the impact of the Monetary Policy Rate (MPR), the Central Bank’s Open Market Operations and fiscal discipline.”
“Other natural factors include high supply of food items due to seasonality as well as reduced transportation costs owing to the drop in oil pump price,” he stated.
Meanwhile, Mr. Zulu said the International Monetary Fund (IMF) bailout package and debt restructuring will be a game changer which has potential to ease the pressure on the treasury and ensure that social sectors are not neglected.
“The comforting thing is that the Bank of Zambia Governor and his Deputies have security of tenure and it is my firm belief that they will work in the best interest of the economy through various Monetary Policy tools and in unison with the Ministry of Finance to ensure we do not slide back in an economic comma. The IMF bailout package and debt restructuring will be a game changer which has potential to ease the pressure on the treasury and ensure that social sector is not neglected,” Mr. Zulu said.
Annual rate of inflation for August 2022 has dropped to 9.8%.2022 from 9.9% recorded last month.

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