Zambia Eyes Inflation Target for First Time Since 2019 Amid Economic Recovery
For the first time in six years, Zambia is on track to bring its inflation rate within the central bank’s target range—a key milestone in the country’s economic recovery.
Secretary to the Treasury, Felix Nkulukusa, announced on Thursday that annual consumer price inflation is projected to fall below 8% by the end of 2025, aligning with the Bank of Zambia’s target range of 6% to 8%.
“We expect inflation to continue to decline,” Nkulukusa said during a speech in Lusaka. “We are confident that we can probably reach the 6–8% mark by the end of the year.”
Zambia has battled severe inflationary pressures in recent years. In 2021, inflation surged to nearly 25% after the country became the first in Africa to default on its sovereign debt during the COVID-19 pandemic.
Although inflation began to ease in the following years, a devastating drought in 2024 caused a sharp spike to 16.8%.
The drought—reported to be the worst in over a century—resulted in widespread power shortages and surging food and energy prices due to poor maize harvests and declining hydropower output.
A weakened kwacha further intensified inflation by increasing the cost of imports, worsening the financial strain on households and businesses.
Nkulukusa’s forecast is notably more optimistic than the Bank of Zambia’s February 2024 projections, which anticipated double-digit inflation into next year.
If realized, the accelerated decline in inflation would provide much-needed relief to citizens facing prolonged economic hardship. According to Bloomberg, this could also support renewed economic momentum.
In a further sign of improving investor confidence, Moody’s Investors Service recently upgraded its outlook on Zambia’s external debt, signaling a potential credit rating increase to Caa2.
While better rainfall this year has revived hopes for an improved agricultural season, challenges persist.
The national power grid remains under strain, and power outages continue in several regions. Experts emphasize that a full recovery will depend on both agricultural success and the rehabilitation of critical energy infrastructure.
Despite the hurdles, the government’s optimistic outlook suggests that Zambia may finally be turning a corner after years of economic volatility.
