THE annual rate of inflation has dropped to 7.4 per cent from 7.8 per cent recorded in May, according to Central Statistical Office data
Announcing Zambia’s annual rate of inflation for the month of June, which has dropped to 7.4 per cent from 7.8 per cent in May, CSO acting director of census and statistics, Goodson Sinyenga, said the said the slowdown in the year-on-year inflation was mainly attributed to the “base effect”.
Base effects occur when variations in the annual growth rate of the Consumer Price Index (CPI) are attributable to an unusual movement in the index 12 months earlier owing, for instance, to significant changes in commodity prices.
It refers to the impact of the rise in the price level in the previous year over the corresponding rise in the price levels in the current year.
“The year-on-year inflation rate as measured by the all items Consumer Price Index (CPI) for June, 2018, decreased to 7.4 per cent compared to 7.8 per cent recorded in May, 2018. This means that on average, prices of goods and services increased by 7.4 per cent between June, 2017, and June, 2018. The decrease in the annual rate of inflation was mainly attributed to the base effect arising from the adjustment in electricity tariffs in June, 2017,” Sinyenga told journalists in Ndola, Friday.
“Of the total 7.4 per cent annual inflation rate recorded in June, 2018, food and non-alcoholic beverages accounted for 4.0 percentage points, while non-food items accounted for a total of 3.4 percentage points.”
CSO data also showed that the annual inflation rate for June reduced for housing, water and electricity, among others.
However, the annual food inflation rate in June increased to 7.5 per cent compared to 6.9 per cent recorded in May, indicating an increase of 0.6 percentage points.
The increase in the annual food inflation rate is mainly as a result of price changes of a 20 litre tin of maize grain and a 2 Kg packet of sugar, according to CSO data.
On the annual non-food inflation rate for the same month under review, a reduction was recorded at 7.3 per cent from 8.9 per cent recorded in May, indicating a decrease of 1.6 percentage points.
“The decrease was mainly attributed to the base effect arising from the adjustment in electricity tariffs in June, 2017,” explained Sinyenga.