ECONOMIST Chibamba Kanyama says he is surprised that the country is almost attaining a single-digit inflation rate amid high fuel prices.

But Economics Association of Zambia (EAZ) Interim National Secretary Gibson Masumbu says citizens are enjoying the benefits of reduced inflation because prices of commodities are not increasing at a higher pace.

The annual inflation rate for April 2022 has dropped to 11.5 percent from the 13.1 percent recorded in March.

According to Zambia Statistics Agency interim statistician general Mulenga Musepa, the slowdown in annual inflation was mainly attributed to a decrease in prices of both food and non-food items.

But in an interview, Friday, Kanyama insisted that he would be surprised if by June, inflation would continue to drop.

“I will be surprised like I said if by June we will continue to enjoy a reduction in the inflation rate mainly because of the problem of fuel. I am surprised, actually, personally, I should say I am surprised that we are coming near to single digit inflation in the midst of high prices of fuel. I don’t understand because we all know that prices have actually gone up. But maybe the feeding mechanism, what we call the transmission mechanism hasn’t yet reflected in the overall prices of consumer goods because usually the measurement focuses a lot on food and we are just getting into the harvest season now and there is a lot of food available,” he said.

“Maybe the factor that has led to inflation to drop as opposed to the impact of fuel is food. But I do not see this being sustained for long because of fuel.”

Kanyama, however, said a reduced inflation rate was good for the country’s economy.

“But it is good news, I will say this that the lower the rate of inflation the better for the economy, the better for investor confidence because it unlocks capital. The commercial banks are able to unlock resources for investment because of the confidence that the money is not losing value as much as it lost value the other year or the other period. So it just unlocks opportunities for investment, it’s good for consumers. A lower inflation rate is a benefit for a consumer, it’s a benefit to a civil servant, it’s a benefit to the worker because the prices are not increasing as much as they increased before,” said Kanyama.

“So what we are all worried about is the loss in the buying power of the kwacha. Of course 11 point something percent is still high inflation rate but of course it has reduced from about 24 to where it is today. It means we shouldn’t worry as much as we worried last year in terms of losing buying power. So I think we should continue on that trend. Let us continue tightening the economy were possible but let us not strangle investment as we are trying to reduce the rate of inflation.”

And EAZ Interim National Secretary Gibson Masumbu said citizens were enjoying the benefits of reduced inflation as prices of commodities were not increasing at a higher pace.

“That is already the benefit (drop in inflation) because you are subjected to the same price for a long period of time and then you are able to plan, you are able to project. And that is the essence of stabilising the prices. So the benefits are already there because it’s been reducing, it means that the prices have not been increasing at a higher pace. And so people can buy goods for a long period of time at the same prices without being subjected to look for more money to buy the same thing,” he said.

“I can also give you [an example of] things like bread. Bread as one loaf is K16 in my area for the last six, seven months. Meat I think has been K89 per Kg, I think for the last six months. That is stability in the price and that is what we want. So it’s good that inflation is coming down. So when it is coming down it means that period that prices remain constant is longer. But it doesn’t mean that prices are not increasing like they did when fuel went up, prices increased. So the price can increase but the increment is not like rapid.”

Masumbu insisted that the impact of the drop in inflation was being felt.

“And probably again you can bear witness with me after that increase in fuel prices, when the prices adjusted, it’s almost two months or one month, when you go back to the shops you probably still find the same prices on most of the commodities. So that is the benefit that we are enjoying in the rate of inflation. So in short we are already having the impact. We have had the impact I think for some time now, people don’t realise it but actually it’s been there. The impact has been there because the prices have not been moving that quickly,” said Masumbu.