Zambia inflation falls to 8-year low despite Iran war shocks

Zambia’s annual inflation rate slowed to its lowest level in more than eight years in May, underscoring the growing resilience of the southern African economy despite rising global price pressures linked to the conflict involving Iran and wider tensions in the Middle East.

Data released by the Zambia Statistics Agency showed consumer inflation eased to 6.6 percent in May from 6.8 percent in April, marking the fifth consecutive monthly slowdown and the lowest reading since February 2018. On a monthly basis, consumer prices rose by 0.2 percent, compared with a 0.7 percent increase the previous month.
The latest figures reflect improving macroeconomic conditions in Africa’s second-largest copper producer, supported by a stronger local currency, rising copper export earnings and expectations of a record maize harvest this year.

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“The continued moderation in inflation points to improving supply conditions and the stabilising effect of the stronger kwacha,” said economist Chibamba Kanyama. “Food prices have remained relatively contained despite global pressures from energy and fertiliser markets.”

The Zambian kwacha has appreciated by more than 19 percent against the US dollar this year, making it one of the world’s best-performing currencies in 2026 as higher copper prices boosted foreign-exchange inflows.

The stronger currency has also helped improve Zambia’s external position, with foreign reserves rising to about $6.2 billion by the end of March, equivalent to more than five months of import cover.

Food inflation slowed to 6.9 percent in May from 7.3 percent in April, helped by expectations of a bumper corn harvest after favourable rainfall and improved farming conditions. The government projects maize production will rise by about 28 percent this year to a record 4.94 million tonnes.

Non-food inflation, however, edged slightly higher to 6.1 percent from 6 percent previously, reflecting the lingering impact of higher global fuel and import costs triggered by geopolitical tensions.

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“The Middle East conflict continues to pose risks through oil prices and transport costs, but Zambia has benefited significantly from domestic food supply improvements,” said Lubinda Haabazoka, an economist and former president of the Economics Association of Zambia.

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The Bank of Zambia recently cut its benchmark interest rate by 25 basis points to 13.25 percent, citing easing inflation pressures, stronger agricultural output and improved exchange-rate stability.

The move contrasts with the cautious approach adopted by many central banks globally as policymakers remain wary of renewed inflation risks stemming from geopolitical instability and volatile commodity markets.

To cushion households from rising global fuel prices, Zambian authorities have temporarily suspended some fuel-related taxes and extended value-added tax relief measures on fuel imports through the end of June.

Meanwhile, the government continues negotiations with the International Monetary Fund and the World Bank over additional financial support as the country seeks to consolidate its economic recovery ahead of elections scheduled for August.