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Zambia’s annual
inflation slowed to 7.1 percent in November, due to easing food prices,
putting it on course to end 2010 well below the central bank’s year-end
target of 8 percent, data showed on Thursday.

Inflation slowed from 7.3 percent in October.

“The decline is
attributed to reductions in the cost of some food items,” the Central
Statistical Office (CSO) said in a statement.

Food inflation accounts for more than 50 percent of the CPI basket, and has eased partly due to a bumper maize harvest.

Central bank
governor, Caleb Fundanga, said this month that inflation was likely to
be below the year-end target of 8 percent in 2010, due to the higher
maize crop and expectations the exchange rate for Zambia’s kwacha
currency would be stable.

The kwacha has
gained about 10 percent against the dollar from a low in the second
quarter of the year, and was last trading at 4,730 to the dollar on
Thursday.

The CSO also said
Zambia’s trade account swung to a deficit in October for the first time
this year, recording a shortfall 451.5 billion kwacha versus a surplus
of 692 billion kwacha in September.

“The deficit was
largely due to imports of petroleum products and the appreciation of
the kwacha, which reduced our export earnings,” CSO acting director,
John Kalumbi, said.

Finance minister,
Situmbeko Musokotwane, said this month that Zambia was closely watching
its strengthening currency. The kwacha’s appreciation from early 2007
to mid-2008 hit export earnings.

REUTERS