• A lot of macro-economic fundamentals have unfavorably moved.
• Zambia’s inflation rate is normally controlled by the exchange rate.
• This is because most of the goods and services consumed in the economy are imported.

An Economist has projected an increase in inflation rate for February, 2023 due to unfavorable movements in macro-economic fundamentals such as the exchange rate.
Speaking in an interview with Money FM News, Dr. Lubinda Haabazoka observed that Zambia’s inflation rate is normally controlled by the exchange rate because most of the goods and services consumed in the economy are imported.
Dr. Haabazoka noted that within the last four months, the Kwacha has moved from K15 per US dollar to slightly closer to K20 per dollar and this movement will be reflected in the inflation rate.
“I think the inflation rate will increase because when you look at what has happened in the economy, a lot of macro-economic fundamentals have unfavorably moved. Inflation in Zambia is normally controlled by the exchange rate because most of the goods and services that we consume in the economy are imported.”
“So when you look at the exchange rate, I think within the last 4 months the Kwacha has moved from K15 per dollar to slightly closer to K20 per dollar and this of course is going to be reflected in the inflation rate,” Dr. Haabazoka stated.
He further noted that major cost inputs in production such as fuel, has seen a significant increase in prices, thereby pushing the transportation cost upwards.
“Retailers and wholesalers have reacted by adjusting their prices upwards,” he added.
Zambia Statistics Agency (ZamStats) is today expected to announce inflation rate for February 2023. In January 2023, inflation declined to 9.4 percent from 9.9 percent in December 2022, following price movements across a number of items in the
According to Bank of Zambia, inflation is projected to increase and remain above the target range of 6 to 8 over the forecast horizon, contrary to November 2022 projections that showed that the rate would return to the target range in the first quarter of 2024.
“In 2024, inflation is forecast to average 10.1 percent. The factors underlying the forecast include the recent rapid depreciation of the Kwacha against the US dollar, the anticipated increase in electricity tariffs to cost reflective levels, and the possible reduction in maize production due to among other factors adverse weather conditions and crop infestation by Fall Armyworms.”