By Maimbolwa Mulikelela –

DESPITE prices for essential commodities not showing signs of subsiding, Zambia’s inflation is poised for a single digit.
In the 2022 National Budget, Finance and National Planning Minister Situmbeko Musokwane projected that inflation for this year will be around six to eight per cent.
The country continues to record reduced inflation against all odds in the recent times, thus achieving single digit inflation before the end of the year seems feasible.
Last month, the inflation rate declined to 15.1 per cent due to favourable price movements in food items as announced by the Zambia Statistics Agency (ZamStats) interim Statistician General Mulenga Musepa.
Mr Musepa indicates that the annual rate of inflation declined to 15.1 per cent in January 2022 from 16.4 per cent in December 2021.
This means that on average prices of goods and service increased by 15.1 per cent between January 2021 and January 2022.
The slowdown in the annual inflation rate is mainly attributed to favourable price movements in food items such as meat, fish, fruits and vegetables.
However, some citizens are concerned with the current prevailing high prices of essential food items, stating that the decline in inflation does not match with the prices of food.
Mary Chabankani, a Lusaka resident, says the reduction in inflation should match with what is currently prevailing on the market with regard to the prices of food.
She notes with concern that the prices of meat, chicken and fish have remained high despite the country recording a decline in food items.
“You can clearly see from the statistics presented by the Zambia Statistics Agency that they don’t reflect the true picture of what is prevailing on the market.
They have cited meat, fish, fruits and vegetables as some of the factors that have led to the decline in inflation, which I feel it’s not true,” she says.
Ms Chabankani like many citizens questions the ZamStats January inflation figures, following the adjustments in pump prices on December 16, last year and removal of subsidies by Government.
“It is just a norm when fuel prices are adjusted upwards, prices of essential items which include food also increases as well as transportation costs and that have a major role to play,” she says
In response, Mr Musepa explains that the annual food inflation for January 2022 was recorded at 16.9 per cent when compared to 19.9 per cent in December 2021, a decrease of three percentage points.
While, the non-food inflation rate for January 2022 was 12.7 per cent from 12.1 per cent in December 2021.
This increase is mainly attributed to price movements of non-food items such as fuels and lubricants, passenger transport by road, general car service, repair charges and car license.
“Food and non-alcoholic beverages group contributes 9.5 percentage points, while non-food items accounted for 5.6 percentage points to the overall inflation rate of 15.1 per cent.
“Of the 5.6 percentage points, housing, water, electricity, gas and other fuels contributed the highest at 2.0 percentage points followed by furnishings, household equipment and routine household maintenance and clothing and footwear groups that contributed 1.1 percentage points each,” Mr Musepa explains.
The rest of the non-food groups accounted for the remaining 1.4 percentage point.
From this, Lusaka province contributed 4.6 percentage points, while North-Western and Western had the lowest contributions of 0.4 percentage points.
Copperbelt Province is the second contributing 3.7 percentage point to the overall annual inflation.
Commenting on the recent inflation figures, Zanaco Bank experts Gerald Soko and Patrick Chileshe says that for many, the continued moderation in inflationary pressure for Zambia is seemingly at odds with expectations.
This is considering that Government started removing subsidies on fuel that saw prices of petrol and diesel go up last December by 20 per cent and 29.2 per cent, respectively.
They indicate that food items are the only component of consumer basket that carry on with cooling inflationary pressure.
At the centre of this are meat products, some vegetables, cooking oil and sugar. For meat, there are two factors that explain continued inflation softening observed in January.
“Firstly, there are usually lags between when producers face some input costs and when they take the produce to the market. As such, there are trends to be a delay in how prices for meat products react to changes in such input costs as feed.
“Speaking to chickens, prices for feed have largely been stable from the time the Kwacha started appreciating with prices for day old chicks trending downward at the time that electricity supply has been stable,” they explain.
On top of the foregoing, the bank experts are of the view that annual food inflation also benefited from the base effect considering the heightened inflation terrain that characterized much of 2021.
On the other hand, Zambia’s cumulative total trade for the period of 2020 to December 2021 stood at K359.4 billion, representing a 48.3 per cent increase.
Mr Musepa states that the cumulative total trade for the period January 2020 was K242.3 billion to K359.4 billion in December 2021.
“The total value of exports via all modes of transport for the period January to December 2021 was K219.7 billion.
Road transport accounted for K122.4 billion representing 55.7 per cent, rail transport is second at K18.3 billion and air transport is third accounting for K4.1 billion,” he states.
Other modes of transport accounted for K75 billion, representing 34.1 per cent.
The total value of imports via all modes of transport for the period January to December 2021 was K139.7 billion.
Mr Musepa says road transport was the highest at K75.2 billion representing 53.8 per cent share, followed by air transport at K11.9 billion.
He adds that Zambia recorded a trade surplus of K6.6 billion in December 2021 compared to K7.2 billion in November 2021, representing a 7.6 per cent decrease.
Exports mainly comprising domestically produced goods, decreased by 7.5 per cent to K17.5 billion in December 2021 from K18.5 billion in November 2021.
“This was mainly on account of a 10.3, 8.0 and 7.9 per cent decrease in export earnings from raw materials, Intermediate goods and Capital goods, respectively,” Mr Musepa indicates.
He pointed out that imports decreased by 7.4 per cent to K10.9 billion in December 2021 from K11.8 billion in November 2021.
This is mainly as a result of a 23.9, 7.7 and 9.4 percent decrease in import bills of raw materials, Intermediate goods and capital goods, respectively.
On the traditional exports, Zambia’s traditional export earnings have decreased by 9.3 per cent to K13.3 billion in December 2021 from K14.7 billion the previous months.
In terms of the share in total exports, traditional exports accounted for 76.1 per cent of export earnings in December 2021.
Mr Musepa further explains that export earnings from refined copper in December 2021 declined to K13, 269.4 million from K14, 681.4 million previous month.
“Copper export volumes in December decreased by 6.3 per cent to 81.3 thousand tonnes from 86.8 thousand tonnes in November 2021.
“Copper prices on London Metal Export (LME) market for the corresponding months decreased by 2.2 per cent to US$9,550.3 per tonnes in December 2021 from US$9,765.5 per tonnes in November 2021,” he says.
On Non-Traditional Export (NTEs), the NTEs earnings also decreased by 1.0 per cent to K4.2 billion in December 2021 from K4.23 billion the previous month.
Mr Musepa says NTES accounted for 23.9 per cent of total export earnings in December 2021.He also indicates that agricultural products accounted for a share of 27.8 per cent of Zambia’s NTEs in December 2021 compared to 31.7 per cent in November 2021.
Export earnings from agricultural products decreased by 13.5 per cent to K1.2 billion in December 2021 from K1.3 billion in November 2021.
The major export commodities were tobacco, partly or wholly stemmed/stripped accounting for 16.1 per cent.
Mr Musepa adds that non-agricultural products accounted for a share of 72.2 per cent of Zambia’s NTEs in December 2021 compared to 68.3 per cent the previous month.
Zambia’s major export products in December 2021 were from the intermediate goods category mainly comprising copper anodes for electrolytic refining and electro-refined copper cathodes accounting for 85 per cent.
Mr Musepa says exports from the consumer goods, raw materials and capital goods categories; collectively accounted for 15.0 per cent of total exports in December, 2021
He indicates the major import product category in December 2021 was capital goods, accounting for 37.8 per cent.
“The consumer goods category was second at 29.0 percent, followed by the intermediate goods and raw materials categories, accounting for 25.7 per cent and 7.5 per cent, respectively,” Mr Musepa says.
The major export destination in December 2021 was Switzerland, which accounted for 44.3 per cent of the total export earnings.
Switzerland was the third main destination accounting for 7.1 per cent of the total NTEs’ earnings.
The major export products were Nickel ores and concentrates accounting for 42.6 per cent of total NTE earnings from that country.
Zimbabwe was the fourth main destination accounting for 6.8 per cent of the total NTE earnings. The major export product was Portland cement accounting for 29.2 per cent of total NTE earnings from that country.
The fifth main destination was Tanzania, which accounted for 3.0 per cent of the total NTE earnings.
The major export products were Oil-cake and other solid residues, of soya-bean accounting for 31.8 per cent of total NTE earnings from that country.These five countries collectively accounted for 74.6 per cent of Zambia’s total NTE earnings in December, 2021.