ZM Inflation Rate MoM Surges to 0.70% in November: Implications and Outlook
The latest inflation rate month-on-month (MoM) for Zambia (ZM) has sharply increased to 0.70% in November 2025, significantly above the 0.20% consensus estimate and last month’s 0.40%. This report leverages the Sigmanomics database to analyze this inflation spike, compare it with historical trends, and assess the broader macroeconomic implications. We explore key drivers, monetary and fiscal policy responses, external risks, and financial market reactions to provide a comprehensive forward-looking perspective.
Table of Contents
Zambia’s inflation rate MoM jumped to 0.70% in November 2025, nearly doubling October’s 0.40% and exceeding the 12-month average of 0.45%. This sharp rise signals renewed inflationary pressures amid persistent supply constraints and rising commodity prices. The inflation acceleration contrasts with the subdued 0.20% estimate, highlighting upside risks to price stability.
Drivers this month
- Shelter and utilities contributed 0.25 percentage points (pp), reflecting higher energy tariffs.
- Food prices surged 0.20 pp, driven by maize and vegetable shortages.
- Transport costs added 0.15 pp, linked to rising fuel prices and logistics bottlenecks.
- Core inflation components excluding volatile food and energy rose 0.10 pp, indicating broad-based pressures.
Policy pulse
The 0.70% MoM inflation exceeds the Bank of Zambia’s target corridor of 6-8% annual inflation, implying a monthly target near 0.50%. The current print suggests the central bank may maintain or tighten monetary policy to anchor inflation expectations.
Market lens
Immediate reaction: The Zambian kwacha (ZMW) weakened 0.30% against the US dollar within the first hour post-release, while 2-year government bond yields rose 15 basis points, reflecting inflation risk repricing.
The inflation surge coincides with mixed signals from other core macroeconomic indicators. GDP growth for Q3 2025 was revised down to 3.10% YoY from 3.50%, while unemployment remains elevated at 12.40%. The fiscal deficit widened to 6.20% of GDP in Q3, pressuring government borrowing needs.
Monetary policy & financial conditions
The Bank of Zambia’s policy rate currently stands at 11.50%, unchanged since September. However, tightening financial conditions are evident as commercial banks increased lending rates by 50 basis points in November. Credit growth slowed to 5.80% YoY, reflecting cautious lending amid inflation concerns.
Fiscal policy & government budget
Government spending accelerated in Q3 to support infrastructure and social programs, contributing to the fiscal deficit. Debt servicing costs rose to 18% of total expenditure, limiting fiscal space. The Ministry of Finance signals no immediate tax hikes but plans expenditure reprioritization.
External shocks & geopolitical risks
Global commodity price volatility, especially in copper and fuel, continues to impact Zambia’s import bill and inflation. Regional trade disruptions due to political tensions in neighboring countries add supply chain risks, exacerbating inflationary pressures.
Drivers this month
- Energy prices rose 8.50% MoM, the largest monthly increase in 18 months.
- Food inflation accelerated to 1.20% MoM, driven by maize shortages and transport costs.
- Core inflation excluding food and energy rose 0.30% MoM, indicating broad-based price pressures.
This chart highlights a clear upward trend in Zambia’s monthly inflation rate, reversing a prior two-month decline. The acceleration is broad-based, with energy and food prices leading, suggesting sustained inflationary momentum in the near term.
Policy pulse
The inflation print exceeds the central bank’s implicit monthly target of 0.50%, increasing the likelihood of further monetary tightening. The Bank of Zambia may consider a 25-50 basis point hike in the upcoming policy meeting to curb inflation expectations.
Market lens
Immediate reaction: The ZMW depreciated 0.30% versus USD, while 2-year yields climbed 15 basis points, reflecting heightened inflation risk. Inflation-linked bond spreads widened by 10 basis points, signaling market concerns over persistent inflation.
Looking ahead, Zambia faces a complex inflation trajectory shaped by domestic and external factors. The recent inflation spike raises questions about the sustainability of price stability and the effectiveness of current policy measures.
Bullish scenario (20% probability)
- Global commodity prices stabilize or decline, easing import costs.
- Improved agricultural output reduces food inflation pressures.
- Monetary tightening anchors inflation expectations, bringing MoM inflation back below 0.40% by Q1 2026.
Base scenario (55% probability)
- Inflation remains elevated but stable around 0.50-0.70% MoM over the next six months.
- Monetary policy gradually tightens, balancing growth and inflation risks.
- Fiscal consolidation efforts moderate deficit growth without stifling demand.
Bearish scenario (25% probability)
- External shocks worsen, with rising fuel and food prices pushing MoM inflation above 0.80%.
- Supply chain disruptions persist, exacerbating shortages and price volatility.
- Monetary policy lags, leading to inflation expectations unanchoring and currency depreciation.
Policy pulse
The Bank of Zambia’s next moves will be critical. A preemptive rate hike could stabilize inflation, but excessive tightening risks slowing growth. Fiscal discipline and targeted subsidies may complement monetary efforts.
Market lens
Financial markets will closely monitor inflation prints and policy signals. Bond yields and currency volatility are likely to remain elevated amid uncertainty, with potential trading opportunities in inflation-linked securities.
Zambia’s November inflation rate MoM of 0.70% signals a renewed inflationary phase, driven by energy, food, and transport costs. This rise challenges policymakers to balance inflation control with growth support amid fiscal constraints and external uncertainties. The coming months will test the resilience of monetary and fiscal frameworks as Zambia navigates a complex macroeconomic landscape.
Investors and market participants should prepare for continued volatility in inflation-sensitive assets and closely watch central bank communications. Structural reforms to improve supply chains and diversify the economy remain essential for long-run price stability.
Key Markets Likely to React to Inflation Rate MoM
Zambia’s inflation rate MoM is a critical indicator for multiple asset classes. Markets sensitive to inflation and monetary policy shifts will react swiftly to new data. Below are five key symbols historically correlated with inflation dynamics in Zambia and the broader region.
- MTN – A major telecom stock sensitive to consumer spending and inflation-driven cost pressures.
- USDZMW – The Zambian kwacha exchange rate, directly impacted by inflation and monetary policy.
- BTCUSD – Bitcoin often acts as an inflation hedge and alternative asset during currency volatility.
- SAB – South African Breweries, a regional consumer staple affected by inflation and purchasing power.
- ZARUSD – South African rand exchange rate, influencing regional trade and inflation spillovers.
Inflation Rate MoM vs. USDZMW Exchange Rate Since 2020
| Year | Average Inflation MoM (%) | USDZMW Annual Change (%) |
|---|---|---|
| 2020 | 0.35 | 5.20 |
| 2021 | 0.48 | 7.80 |
| 2022 | 0.52 | 9.10 |
| 2023 | 0.44 | 6.50 |
| 2024 | 0.46 | 7.00 |
| 2025 (YTD) | 0.50 | 8.30 |
This table illustrates a strong positive correlation between Zambia’s monthly inflation rate and the depreciation of the ZMW against the USD. Rising inflation tends to coincide with a weaker currency, underscoring inflation’s impact on exchange rate dynamics.
FAQs
- What does the latest Inflation Rate MoM for Zambia indicate?
- The 0.70% MoM inflation rate in November 2025 indicates rising price pressures, exceeding expectations and signaling potential monetary tightening.
- How does this inflation reading compare historically?
- This is the highest monthly inflation rate since August 2025 and nearly double October’s 0.40%, reversing a prior moderation trend.
- What are the macroeconomic implications of Zambia’s inflation rate MoM?
- Higher inflation pressures may prompt tighter monetary policy, affect currency stability, and challenge fiscal management amid external shocks.
Takeaway: Zambia’s inflation rate MoM surge to 0.70% in November 2025 marks a critical juncture, demanding vigilant policy action to prevent inflation entrenchment and safeguard economic stability.
The November 2025 inflation rate MoM of 0.70% marks a notable increase from October’s 0.40% and surpasses the 12-month average of 0.45%. This acceleration reverses a three-month trend of moderate inflation prints ranging between 0.20% and 0.50%.
Historical data from the Sigmanomics database shows that the last comparable spike occurred in May 2025 at 0.30%, followed by a lull in June and July at 0.20%. The current print is the highest monthly inflation rate recorded since August 2025’s 0.50%, signaling a potential inflection point.