The annual rate of inflation, as measured by the all items Consumer Price Index (CPI), reduced by 0.3 percentage points from 14.7 percent in May 2009 to 14.4 percent in June 2009. The decrease in the annual inflation rate in June 2009 was mainly attributed to reduction in the prices of some food products such as mealie meal and maize grain.
Friday, 26 June 2009
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Prices do not cause inflation. Prices are merely a sign of inflation. Inflation is caused by various things, loose credit, printing money, and loss of foreign currency. Because of the dip in copper prices, and other commodities, zambia has lost foreign currency and the kwatcha has suffered as a result.
ReplyDeleteTrue Skill,
ReplyDeletePrices do not cause inflation. Prices are merely a sign of inflation. Inflation is caused by various things, loose credit, printing money, and loss of foreign currency.
Anything that would increase the ratio of money in the economy to the amount of goods and services produced in the economy would cause inflation.
Because of the dip in copper prices, and other commodities, zambia has lost foreign currency and the kwatcha has suffered as a result.
Which brings me to another cause of inflation - policy. The fact that the mines were no longer in state hands, means Zambia missed out on billions from the copper boom. If it still owned the mines, the currency would be stabilized by the presence of foreign currency or raw materials reserves.
Then, there is the huge state bureaucracy, which takes in taxpayer money and 'donor aid', and borrows on top of that, without commensurate production of goods and services. There are relatively speaking some goods and services produced, but there is also a lot of wastage.