Maravi

Govt considers revising inflation target

Govt considers revising inflation target
Written by Kabanda Chulu

GOVERNMENT is considering revising the inflation target from the anticipated seven per cent to about 12 per cent following the current economic trends that outweigh the attainment of a single-digit inflation.

Sources at the Ministry of Finance yesterday said the government would however maintain the seven per cent target of economic growth rate.

Finance minister Situmbeko Musokotwane could however not comment on the matter as he was reportedly in a meeting.

The sources said the issue of food, especially the increase in maize prices, was creating a huge inflationary pressure hence the decision to change the inflation target because it appeared unattainable.

“We are still hopeful about the economic growth rate of seven per cent but we do not think that the inflation target of seven per cent will be met especially that various factors such as food is creating too much pressure and the target that is likely to be met by the end of the year is between 10 to 12 per cent,” said the sources. “This will be possible since government has taken some measures to ensure there is a reduction in prices for food especially maize as you know food especially mealie meal plays an important role in the attainment of required inflation targets.”

According to the Central Statistical Office, the inflation rate for October stood at 15.2 per cent, only two months before the end of 2008.

And last week, the Economics Association of Zambia (EAZ) observed that it was unlikely for Zambia to end the year with a single-digit inflation rate because of many factors against its attainment.

The EAZ noted that there were many factors outweighing Zambia’s attainment of its economic targets than those that would contribute to its attainment.

It cited the uncertainties surrounding the global food supply and the continued price increase of food such as maize meal on the local economy.

Other variables, according to EAZ, that would have a huge impact on the attainment of the targets include the cost of energy which is still rising for both fuel and electricity and also increased government spending towards last month’s presidential elections contributed to high inflationary pressures.

Recently, the Bank of Zambia observed that government’s removal of subsidies on domestic fuel prices and the global food crisis were threatening the attainment of the seven per cent annual inflation target. The Central Bank also noted that inflationary pressures would further arise from several factors that include the increasing global oil prices and the 15 per cent wage increase for government workers.

Labels: INFLATION, MINISTRY OF FINANCE

posted by MrK @ 6:32 AM