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Monday, 4 January 2010

Inflation Statistics - December 2009

The annual rate of inflation, as measured by the all items Consumer Price Index (CPI), declined by 1.6 of a percentage point from 11.5 percent in November 2009 to 9.9 percent in November, 2009. The decline of 1.6 of a percentage point in the annual inflation rate in December 2009 is attributed to a result of "decreases in some food prices". But of the real reason is the continuous strengthening of the Kwacha off the back of the resurgence in commodity prices. More detail via the CSO Monthly Bulletin.

A health warning on the CSO bulletin : It is disappointing reading the latest CSO article on National Poverty Trends 1996 - 2006 , where they attempt to spin poverty reduction between 1996 - 2006. What they forget is that poverty rates actually rose between 2004 (58.4%) and 2006 (59.3%). If the CSO continues with this spin we will start losing faith in the credibility of their numbers. Its quite obvious the period was picked to illustrate a downward trajectory, with the intention of fooling those who lack attention to detail. May be its time we made the CSO independent.


  1. I would think that a two year time frame is too short to measure an increase in poverty, since for cyclical and other reasons (bad harvest, sector downturn) there could be short term fluctuations. 0.9% increase seems small.

  2. Point noted.

    But my argument is not that poverty is on the increase but rather on three issues :

    1) the articles does not justify why it uses a ten year period.

    2) it is silent on the seemingly upward trajectory

    3) it does not acknowledge that both national and regional figures are showing at best STATIC poverty rates between 2004 - 2006. There's certaiy no reduction.

    On your cyclical factors. I am not sure why you think poverty can be cyclical over a two year cycle. Also what factors do you have in mind that may have reversed the gains between 2004 - 2006.

  3. Cho,

    From this prior post it appears that some provinces have recorded increases in poverty while others have recorded decreases from 2004 to 2006. So I suspect regional factors are in play - poor harvests, bad inputs management, low crop prices for cash crops such as cotton for example, etc. The resulting lower income would push more people into poverty.

  4. Kafue,

    Good point, though we know from period discussions that a large proportion of rural dwellers produce for consumption.

    But your point does echo the trend we saw after the market liberalisation with the dismantling of the agriculture system which led to more farmers being pushed into poverty.

    This is what is frustrating about statisticians they don't like looking beyond data and explaining why. But this sort of discussion is what I was hoping the CSO would delve into. It may well be that they have perfectly good reasons, they should be doing more.

    I suppose if they did they we wont have fun!

  5. The CSO's talk of 'lower' inflation is misleading. Few people can distinguish between lower inflation and lower prices. There is little realization that lower inflation merely means that prices have risen more slowly (or less fast) than before. It would be helpful for the CSO to talk instead of 'less' inflation.

    The CSO should also explain how they calculated annual inflation at the end of December 2009 at 9.9%, when annual inflation at the end of November was 11.5%. This reduction should indicate that overall prices actually declined during December by 1.6%. Is that correct? If so, it would be a serious matter. If a decline of 1.6% per month were to continue for a whole year, the final price reduction at the year end would amount to 21%, which is a severe level of deflation, a condition which, as the Japanese will tell you, can be even worse than inflation.

    Is the CSO trying to pull the wool over our eyes? Or should we be charitable and assume that, far from trying to deceive us, they themselves do not understand inflation?

  6. Murray,

    The inflation is YEAR on YEAR. It is an annual inflation not a monthly inflation.

    It is comparing the level of prices in December 2009, relative to prices in December 2008.

    The report is clear on this.

    You question on what has actually happened to prices between November 2009 and December 2009 can only answered by looking at the table in the report.

    The table has the heading : National Average prices for selected Products and Months

    Hope this helps..

  7. The text from the Table says :

    A comparison of retail prices between November 2009 and December 2009, shows that the national average price of 1kg of dried kapenta (Siavonga) reduced by 2.9 percent, from K49, 990 to K48, 526. The national average price of 1kg of cucumber reduced by 12.5 percent, from K4, 179 to K3, 655 and the average price of 1kg of dressed chicken also reduced by 1.8 percent, from K17, 538 to K17, 231.

    However, the national average price of a 25 kg bag of white roller meal increased by 3.1 percent, from K46, 289 to K47, 736, while the average price of a 20 litre tin of maize grain increased by 6.1 percent, from K24, 325 to K25, 806.

    The final column has specific changes you are looking for! But of course no "average" change. We have to wait for the JCTR food basket!!

  8. Zambia’s inflation hits single digit

    Sanday Chongo Kabange AfricaNews reporter in Lusaka, Zambia

    Zambia's inflation has reverted to a single digit bracket, from 11.5% in November to 9.9% in December 2009, latest data from the Central Statistical Office (CSO) has revealed.

    The rebound to single digits is the first time in over a year for Africa’s largest copper producer. Industry analysts had anticipated a further decline in Zambia’s inflation but attaining single digits by the fall of 2009 was unexpected. Analysts had banked their projections on unstable micro and macro fundamentals.

    According CSO, annual inflation recoiled back into single digits as result of various factors. It said inflation has declined to 9.9% year-on-year in December from 11.5% in November, the first time it has been below 10 percent since March 2008.

    "The decline of 1.6 percentage points in annual inflation rate in December 2009 was as a result of the decrease in some food prices," said CSO in its monthly bulletin issued in Lusaka on New Year’s Eve.

    Zambia has also recorded a trade surplus of 322.9 billion kwacha in November after a surplus of 299.5 billion kwacha in October.

    The country’s major export products in November were from intermediate goods, mainly copper products.

    Last November, central bank Governor, Caleb Fundanga, said the country had revised its end-December 2009 annual inflation forecast to 10 percent from the previous figure of 12 percent due mainly to falling food prices.

  9. Within the neoliberal mindset, the purpose of having single digit inflation is to make the economy attractive to foreign corporations.

    All the sacrifices - the reduction of services, the privatisation of government services, the increased economic inequality - are all for the purpose of reducing inflation for the benefit of foreign corporations.

    Neoliberalism is a discredited ideology. We need a return to demand side economics, and do it in a way that fits the Zambian people and economy, and no one else.

    I would suggest - getting the mines to pay at least $1.2 billion in taxes a year; universal education and healthcare; investing in agriculture and manufacturing; build infrastructure; cheap credit for SMEs; rebuild the farming cooperatives.

    This would both create wealth in the short and long terms, and create jobs - in fact it would create far more jobs than are created by mining right now (job creation being the excuse given by corrupt government politicians for not taxing the mines).


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