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Zambia May 2014 Inflation Unchanged At 7.8%

According to data released this morning by the Central Statistics office, inflation for May 2014 remained unchanged from the previous month rate of 7.8%. Inflation looks to have stabilized at the beginning of the second quarter following monetary tightening measures by the central bank in the first quarter of this year - policy rate up to 12%, reserve ratio up to 14% and some direct forex intervention. Fuel price increments from April 2014 did not make an immediate impact like they did over the same period last year.


The month of April recorded a trade surplus of K43m, down 46.2% from a revised March 2014 surplus of K79.9m. The trade surplus has been on the decline since February 2014 after hitting a high of K296m in January - a period which has also seen copper prices (copper account for over 70% of export earnings) decline to as low as $6,400 per MT and bounce back to an 11 week high of $6,944 per MT yesterday on the London Metal Exchange.

Higher copper prices could help reverse the recent Kwacha losses which saw the currency breach K7 per US$ yesterday but would also need to be coupled with higher FDI inflows in order to have a significant effect.