ZM Inflation Rate YoY: November 2025 Analysis and Macro Outlook
The latest inflation data for Zambia (ZM) reveals a notable easing in consumer price pressures, with the year-on-year inflation rate declining to 10.90% in November 2025. This figure, sourced from the Sigmanomics database, marks a continued downward trend from recent months but remains elevated relative to historical norms. This report dissects the geographic and temporal context, core macroeconomic indicators, monetary and fiscal policy responses, external risks, financial market reactions, and structural trends shaping Zambia’s inflation trajectory.
Table of Contents
Zambia’s inflation rate YoY for November 2025 registered at 10.90%, down from 11.90% in October and well below the 11.60% consensus estimate. This marks the fourth consecutive monthly decline from a peak of 15.30% in May 2025. Despite easing, inflation remains nearly double the central bank’s 6% target, underscoring persistent price pressures. The geographic scope centers on Zambia’s domestic economy, with temporal focus on the past six months to capture recent volatility and policy impacts.
Drivers this month
- Shelter and utilities inflation moderated, contributing a 0.22 percentage point reduction.
- Food prices, especially maize and cooking oil, remained elevated but showed signs of stabilization.
- Transport costs declined slightly due to lower fuel prices and improved supply chains.
Policy pulse
The Bank of Zambia’s monetary tightening since mid-2025 appears to be gradually curbing inflation expectations. The current reading remains above the 6% inflation target, suggesting continued vigilance in policy stance.
Market lens
Immediate reaction: The Zambian kwacha (ZMW) appreciated 0.40% against the USD within the first hour post-release, reflecting relief at the lower-than-expected inflation print. Short-term government bond yields fell by 15 basis points, signaling improved investor confidence.
Core macroeconomic indicators provide essential context for the inflation trajectory. Zambia’s GDP growth slowed to an estimated 2.80% in Q3 2025, down from 3.50% in Q2, reflecting subdued domestic demand and external headwinds. The unemployment rate remains elevated at 13.20%, limiting wage-driven inflation pressures. Meanwhile, the fiscal deficit widened slightly to 5.10% of GDP in the first nine months of 2025, driven by increased social spending and infrastructure investments.
Monetary policy & financial conditions
The Bank of Zambia has maintained its policy rate at 14.50% since September 2025, aiming to anchor inflation expectations. Credit growth slowed to 8.70% YoY in October, down from 11.20% earlier in the year, indicating tighter financial conditions. Inflation-linked bonds have seen increased demand, reflecting market anticipation of further disinflation.
Fiscal policy & government budget
Fiscal policy remains expansionary, with the government prioritizing infrastructure and social programs ahead of the 2026 elections. However, rising debt servicing costs, now at 4.30% of GDP, constrain fiscal space. The government’s medium-term plan targets deficit reduction to below 3% by 2027, contingent on improved revenue collection and expenditure control.
Drivers this month
- Food inflation contribution: -0.15 pp (stabilizing staple prices)
- Energy costs contribution: -0.10 pp (fuel prices easing)
- Core inflation (ex-food & energy): steady at 8.30%
Policy pulse
The inflation trajectory suggests the Bank of Zambia’s tightening cycle is beginning to take effect. However, core inflation remains sticky, indicating underlying structural challenges.
Market lens
Immediate reaction: The ZMW/USD spot rate strengthened by 0.40%, while 2-year government bond yields declined by 15 basis points, signaling market optimism about inflation control.
This chart confirms a clear downward trend in Zambia’s inflation rate, reversing the sharp increases seen earlier in 2025. While headline inflation is easing, persistent core inflation suggests ongoing structural price pressures. The data supports a cautiously optimistic outlook for disinflation in the near term.
Looking ahead, Zambia’s inflation outlook balances several upside and downside risks. The base case scenario projects inflation falling to 8.50% by mid-2026, assuming continued monetary discipline and stable commodity prices. Bullish scenarios (20% probability) envision inflation dropping below 7% if global food prices decline sharply and fiscal consolidation accelerates. Conversely, bearish scenarios (30% probability) could see inflation rebound above 12% if external shocks, such as a surge in oil prices or renewed supply chain disruptions, materialize.
Monetary policy implications
The Bank of Zambia is likely to maintain a cautious stance, keeping policy rates elevated until core inflation shows sustained decline. Forward guidance may emphasize data dependency, with potential rate cuts deferred to late 2026.
External shocks & geopolitical risks
Risks include volatility in global commodity markets, particularly copper and oil, which heavily influence Zambia’s trade balance and inflation. Regional instability and currency fluctuations could also pressure prices upward.
Structural & long-run trends
Persistent supply bottlenecks, limited agricultural productivity, and fiscal deficits pose long-term inflation risks. Structural reforms in agriculture, energy, and public finance are critical to anchoring inflation expectations sustainably.
Zambia’s November 2025 inflation rate of 10.90% signals progress in taming price pressures but highlights ongoing challenges. Monetary tightening is yielding results, yet elevated core inflation and fiscal constraints temper optimism. Policymakers face a delicate balance between supporting growth and containing inflation amid external uncertainties. Market reactions suggest cautious confidence, but vigilance remains essential. Structural reforms and prudent fiscal management will be key to achieving durable price stability.
Key Markets Likely to React to Inflation Rate YoY
Zambia’s inflation data significantly influences local and regional financial markets, impacting currency valuations, bond yields, and equity performance. Key tradable symbols historically sensitive to inflation shifts include:
- ZMWUSD – The Zambian kwacha’s exchange rate reacts strongly to inflation surprises, affecting import costs and capital flows.
- LUN – Lusaka Stock Exchange index, sensitive to inflation-driven monetary policy changes.
- BTCUSD – Bitcoin often acts as an inflation hedge, with price movements reflecting inflation expectations globally.
- ZCCM – Zambia Consolidated Copper Mines, whose profitability links to commodity price-driven inflation dynamics.
- USDCOP – Colombian peso pair, included for regional commodity market correlation effects impacting Zambia.
Inflation Rate YoY vs. ZMWUSD Since 2020
Since 2020, Zambia’s inflation rate and the ZMWUSD exchange rate have exhibited a strong inverse correlation. Periods of rising inflation correspond with ZMW depreciation, driven by reduced purchasing power and capital outflows. The recent easing of inflation from 15.30% in May 2025 to 10.90% in November has coincided with a 5% appreciation of the kwacha, underscoring the currency’s sensitivity to inflation dynamics. This relationship highlights the importance of inflation control for currency stability and investor confidence.
Frequently Asked Questions
- What is the current Inflation Rate YoY for Zambia?
- The latest inflation rate YoY for Zambia is 10.90% as of November 2025, down from 11.90% in October.
- How does Zambia’s inflation compare historically?
- Inflation peaked at 15.30% in May 2025 and has steadily declined, but remains above the central bank’s 6% target.
- What are the main factors driving inflation in Zambia?
- Key drivers include food and energy prices, supply chain constraints, and fiscal policy dynamics.
Final Takeaway
Zambia’s inflation is easing but remains elevated, requiring continued monetary vigilance and structural reforms to secure sustainable price stability.
Key Markets Likely to React to Inflation Rate YoY
Zambia’s inflation data significantly influences local and regional financial markets, impacting currency valuations, bond yields, and equity performance. Key tradable symbols historically sensitive to inflation shifts include:- ZMWUSD – The Zambian kwacha’s exchange rate reacts strongly to inflation surprises, affecting import costs and capital flows.
- LUN – Lusaka Stock Exchange index, sensitive to inflation-driven monetary policy changes.
- BTCUSD – Bitcoin often acts as an inflation hedge, with price movements reflecting inflation expectations globally.
- ZCCM – Zambia Consolidated Copper Mines, whose profitability links to commodity price-driven inflation dynamics.
- USDCOP – Colombian peso pair, included for regional commodity market correlation effects impacting Zambia.
Inflation Rate YoY vs. ZMWUSD Since 2020
Since 2020, Zambia’s inflation rate and the ZMWUSD exchange rate have exhibited a strong inverse correlation. Periods of rising inflation correspond with ZMW depreciation, driven by reduced purchasing power and capital outflows. The recent easing of inflation from 15.30% in May 2025 to 10.90% in November has coincided with a 5% appreciation of the kwacha, underscoring the currency’s sensitivity to inflation dynamics. This relationship highlights the importance of inflation control for currency stability and investor confidence.FAQ
- What is the current Inflation Rate YoY for Zambia?
- The latest inflation rate YoY for Zambia is 10.90% as of November 2025, down from 11.90% in October.
- How does Zambia’s inflation compare historically?
- Inflation peaked at 15.30% in May 2025 and has steadily declined, but remains above the central bank’s 6% target.
- What are the main factors driving inflation in Zambia?
- Key drivers include food and energy prices, supply chain constraints, and fiscal policy dynamics.
Final Takeaway: Zambia’s inflation is easing but remains elevated, requiring continued monetary vigilance and structural reforms to secure sustainable price stability.
This has been drafted with AI assistance and then thoroughly reviewed, refined, and approved by our human editorial team to ensure accuracy, and originality.
The November 2025 inflation rate of 10.90% compares to 11.90% in October and a 12-month average of 13.20%. This steady decline reflects easing cost pressures across key sectors. The chart below illustrates the downward trend since May’s peak of 15.30%, highlighting a 4.40 percentage point reduction over six months.
Month-on-month, the inflation rate fell by 1.00 percentage point, driven primarily by lower food and transport costs. The 12-month average remains elevated due to earlier spikes in commodity prices and supply chain disruptions.