Inflation is a source of concern whenever it rises.
One of the key contributors to inflation rising is the depreciation of the Kwacha, as our country is import dependent. This is a structural issue with the state of our economy.
To address this issue we need to focus on industrialization, import substitution, and local content policy for goods manufactured locally to ensure we don’t import broken down parts just to be assembled in Zambia.
As an example, if you go to Builders’ Warehouse, work suits are imported from South Africa. Why can’t we incentivize our textile industry? We should be able to do this because we grow enough cotton. Military uniforms are imported. Why can’t we manufacture them locally? So increasing local production and promoting new manufacturing plants to lessen dependence on imports is a key policy measure for us.
Secondly, we have serious reservations about how inflation is measured currently and we will revisit the calibration of goods and services included in the inflation basket.
We would like Zamstats to avail the list of goods and services included in the inflation basket publicly so we can assess the relevance and weightings assigned, to ensure their practicality.
As an example, is it a fair representation to have hairpieces in the inflation basket but exclude fuel on account of the fact that the fuel impact is represented through the prices of goods affected by fuel?
The whole measurement methodology for both GDP and Inflation needs to be revisited.