Zambia's Inflation Holds Steady as Kwacha Rally Eases Import Costs

Zambia's annual inflation rate held steady in July, remaining near the floor of the central bank's 6% to 8% target range as a strengthening kwacha kept import costs in check.

Consumer prices rose 6.5% from a year earlier, unchanged from June, Statistician-General Sheila Mudenda told reporters in Lusaka on Thursday. On a monthly basis, prices edged up just 0.2%.

Much of the stability reflects the strength of the local currency. The kwacha has appreciated almost 18% against the US dollar this year, buoyed by soaring copper prices and government steps to widen its use. That performance ranks it among the world's best-performing currencies tracked by Bloomberg, and has helped to blunt the effect of imported inflation.

Price pressures were also contained by the Government's decision this month to extend its moratorium on fuel taxes until 30 September. The move comes as a renewed escalation in the US-Iran conflict pushes up global energy and fertiliser prices, costs that might otherwise have fed through to Zambian consumers.

The combination of a firm currency and steady inflation could hand President Hakainde Hichilema a timely lift ahead of the general election on 13 August, when he will seek a second term.