Zambia’s annual inflation rate surged to its highest level in over three years in February, as the country grapples with the effects of its most severe drought in over a century and a significant depreciation of the Kwacha currency.

This combination of factors has led to sharp increases in the prices of essential goods, particularly meat and grains.

During an online briefing with reporters on Thursday, acting Statistician-General Sheila Mudenda said consumer prices in Zambia rose by 16.8% in February, a slight increase from the 16.7% recorded in January.

This month, Zambia’s central bank raised its key interest rate by 0.5 percentage points to 14.5%, the highest level in over eight years, Bloomberg reports.

The move aims to stabilise the Kwacha and combat rising inflation. Annual inflation has been consistently above the central bank's target range of 6% to 8% since May 2019, further highlighting the ongoing economic challenges faced by the country.

Earlier this month, the country’s Finance Minister Situmbeko Musokotwane stated that inflation is expected to peak by May, as the arrival of better rainfall helps ease the rise in food and electricity prices.

The ongoing drought has played a significant role in the Kwacha's 18.5% depreciation over the past year, as the country faced higher costs for food and electricity imports due to shortages.

Last month, the energy regulator extended a 115% hike in electricity prices for large consumers by an additional three months to help cover the cost of these imports.

Zambia depends on hydropower for approximately 85% of its electricity, which makes the country highly susceptible to fluctuations in water supply.

Furthermore, in February, the growth rate of food prices accelerated to 20.6%, up from 19.2% in January. Meanwhile, non-food inflation slowed to 11.7% annually, down from 13.2% the previous month. On a monthly basis, prices rose by 2.4%, slightly up from 2.1% in January.