High consumer demand to affect inflation – BoZ

THE Bank of Zambia (BoZ) has said it anticipates that, lagged effects of the depreciation in the exchange rate and higher seasonal demand for some consumer products, will exert more pressure on Zambia’s  inflation levels.

BoZ head of public relations Kanguya Mayondi said in a statement in Ndola yesterday that the seasonal increase in the prices of maize grain and mealie-meal is also expected to put additional inflationary pressure, especially for the month of December.
Mr Mayondi said after weighing these inflationary risks, the BoZ monetary policy committee decided to maintain the policy rate for the month of December at 9.75 per cent.
He said the committee noted that the recent developments in inflation have broadly been in line with expectations, as annual overall inflation was recorded at 7 per cent in November.
“In December, the committee anticipates inflationary pressures to emanate from lagged effects of the recent depreciation of the exchange rate coupled with higher seasonal demand for some consumer products as the festive season approaches.”
“The seasonal increase in the prices of maize grain and mealie meal is also expected to exert additional inflationary pressures going forward,” Mr Mayondi said.
He said the committee, however, observed that these inflationary pressures were likely to be moderated by the effect of a relatively tight monetary policy stance that the central bank had taken.
“Hence, after weighing the inflationary risks, the committee decided to sustain the current relatively tight monetary policy stance and maintain the BoZ policy rate at 9.75 per cent,” he said.
The next meeting of the monetary policy committee to review the BoZ policy rate will be held at the end this month.

Times of Zambia