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Increase in fuel pump price and electricity tariffs necessary, says Bank of Zambia

Dr Denny Kalyalya

The Bank of Zambia says a possible increase in fuel pump prices and electricity tariffs is necessary to restore fiscal sustainability.

Announcing the outcome of the November Monetary Policy Committee (MPC) meeting to the media, Bank of Zambia Governor Dr. Denny Kalyalya said the predicted fourth wave of Covid-19 could disrupt supply chains and trigger price increases.

Dr Kalyalya noted that inflation is projected to decelerate sharply over the next eight quarters on account of the dissipation of base effects, lagged impact on the appreciation of the Kwacha and anticipated strong fiscal consolidation.

“Nevertheless it will remain above the upper bound of 6-8 percent target range,” he explained.

“In 2021 inflation is projected to average 22.6 percent decline to 15.0 percent in 2022, and to 9.3 percent during the first three quarters of 2023,”.

Dr Kalyalya added that the impact of the appreciation of the Kwacha continued to exert downward pressure on prices leading into inflation declining to 21.1 percent in October from 22.1 percent in September.

He further said inflation rose further by 0.2 percentage points to an average of 23.7 percent in the third quarter, adding that this was largely due to the rise in food inflation to 30.8 percent from 29.0 percent in the previous quarter.

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