Hard entry into 2016: Zambia consumer prices climb most in 12 years as kwacha slides

Economy is under strain after a plunge in copper prices to near six-year lows.

CONSUMER prices in Zambia rose the most in more than 12 years in December as the currency extended its decline and the government boosted electricity costs.

The inflation rate rose to 21.1% from 19.5% in November, the Central Statistical Office said in a report on Thursday in the capital, Lusaka. Prices increased 2.1% in the month.

Zambia’s economy is under strain after a plunge in copper prices to near six-year lows triggered a 42% slump in the currency against the dollar this year. The metal makes up more than 70% of Zambia’s exports.

The government earlier this month more than halved its growth forecast for 2015 to about 3%.

The Bank of Zambia raised its benchmark interest rate by a record 3 percentage points to 15.5% in November to combat inflation. The government had targeted an inflation rate of 7% for the end of this year.

-Bloomberg

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