Government should strive for single digit inflation

By Macphersson Mutale

As Zambia steps into the 2026 fiscal year, inflation management must move from political rhetoric to hard policy priority. The consistent rise in prices has silently but steadily eroded household incomes, weakened purchasing power, and pushed more citizens closer to economic distress.

Inflation is no longer an abstract macroeconomic indicator; it is a daily tax on the poor, the middle class, and fixed-income earners.

If government fails to decisively arrest this trend, the social, fiscal, and political costs will be unavoidable.

December 2025 inflation data underscores the urgency. Inflation rose from 10.9 percent in November to 11.2 percent in December, driven largely by non-food items. More concerning, however, is the sharp spike in annual food inflation, which jumped to 12.9 percent from 3.9 percent a year earlier. This means that between December 2024 and December 2025, food prices increased by nearly 13 percent on average—an unbearable burden in a country where food accounts for a significant share of household expenditure.

The Civil Society for Poverty Reduction (CSPR) has rightly pointed to increased financial transactions linked to agricultural activities as a short-term driver of inflation, particularly as farmers purchase inputs ahead of the farming season. This explanation is important, but it must not become a convenient excuse for policy complacency. Seasonal pressures are predictable. The fact that they repeatedly translate into inflation spikes reveals deeper structural weaknesses in supply chains, agricultural financing, market coordination, and price stabilization mechanisms.

The period between October and March, traditionally characterized by food shortages and heightened spending, exposes Zambia’s vulnerability to food price shocks. That vulnerability persists not because Zambia cannot produce food, but because the state has failed to adequately manage storage, distribution, agro-processing, and market efficiency. Inflation in such a context is not purely monetary—it is structural.

The government must therefore pursue a coordinated inflation-fighting strategy in 2026. Monetary policy alone cannot shoulder the burden. While the Bank of Zambia must maintain a firm anti-inflation stance, fiscal discipline is equally critical. Excessive domestic borrowing, delayed payments to suppliers, and unproductive expenditure all inject inflationary pressures into the economy. Inflation control requires restraint, prioritization, and credibility in fiscal management.

Failure to tame inflation will also trigger another unavoidable consequence: pressure for higher public sector wages. Public service workers are not insulated from rising prices. As real incomes fall, demands for salary adjustments will intensify, placing further strain on an already tight fiscal space. Government will then face a difficult trade-off—either concede to wage demands and risk fueling further inflation and deficits, or resist and court industrial unrest. Both scenarios are costly, and both can be avoided if inflation is decisively reduced now.

Encouragingly, CSPR’s assessment that single-digit inflation is achievable—possibly within the first quarter of 2026—offers a window of opportunity. The anticipated bumper harvest from the 2024/2025 farming season could ease food inflation, but only if government ensures efficient market access, prevents speculative hoarding, stabilizes fuel and transport costs, and maintains predictable policy signals.

Bringing inflation down to single digits should not be treated as a symbolic target. It must be a binding policy commitment. Single-digit inflation restores confidence, protects incomes, lowers borrowing costs, and creates space for productive investment. Above all, it restores dignity to households whose budgets have been stretched to breaking point.

In 2026, government will be judged less by growth projections and more by price stability. Inflation is where economic policy meets lived reality. If government fails to control it, citizens will pay the price. And ultimately, so will the government itself.