Zambia's latest inflation number looks encouraging.
Annual inflation fell from 6.2 percent in August to 6.1 percent in September, the lowest level since February 2018. Food inflation also eased, from 6.0 percent to 5.8 percent, while non-food inflation remained at 6.6 percent.
But there is a danger in reading the 6.1 percent figure as simply meaning that life is becoming cheaper.
It isn't.
What is happening is more subtle: the rate at which prices are rising has slowed. The prices themselves remain elevated.
Think of inflation as the speed of a car
The easiest way to understand this is to think about a car.
If a car is moving at 80 kilometres per hour and the driver reduces speed to 70, the car is still moving forward. It has not started going backwards.
Inflation works in much the same way.
When inflation falls from 6.2 percent to 6.1 percent, prices are still moving upwards. They are simply increasing at a slightly slower pace.
So Zambia has not entered a period of falling prices.
It has entered a period where the increase in prices is moderating.
That distinction is particularly important for households because the price increases of previous years are already built into the prices people face today.
Zambia's inflation story is increasingly a food story
The September numbers tell us something important about where the moderation is coming from.
Food inflation fell to 5.8 percent from 6.0 percent. ZamStats attributes the movement mainly to price changes in cereals, vegetables, groundnuts and dried beans.
That matters enormously in Zambia.
For a household, food is not an occasional purchase. It is a recurring and unavoidable expense.
So even a relatively small moderation in food-price increases can help ease pressure on household budgets.
But we should also look at what has not changed.
Non-food inflation remained at 6.6 percent.
That tells us that the moderation is not yet broad-based across the entire consumer basket. Some of the pressure outside food is still present. ZamStats points to movements including passenger air transport and vehicle prices among the factors affecting non-food inflation.
The monthly number gives us another warning
There is another detail that deserves attention.
While annual inflation fell, monthly inflation increased from 0.2 percent in August to 0.4 percent in September.
This is important because annual inflation looks backwards over twelve months, while monthly inflation gives us a more immediate sense of what happened to prices during the latest month.
So we have an interesting combination:
Year-on-year inflation is coming down, but prices still increased during September, and they increased faster than they did in August.
That is another reason not to interpret 6.1 percent as "prices are falling."
They are not.
Why households may not feel the improvement
This is where the official statistics and household experience can appear to diverge.
Suppose a family was spending K2,000 a month on a particular basket of essentials.
If prices rise, that basket might eventually cost K2,100, then K2,200.
If inflation subsequently slows, the basket does not return to K2,000.
It may simply move from K2,200 to K2,250 instead of K2,200 to K2,300.
For the economist, that is an improvement in inflation.
For the household, however, the K2,250 still has to come out of the monthly budget.
That is why lower inflation and a high cost of living can exist at the same time.
Zambia also has a currency story
The exchange rate matters considerably for Zambia because the country imports many of the goods, inputs and fuels that eventually feed into domestic prices.
A more stable currency can reduce the pressure coming from imported inflation by making imported goods and inputs relatively less expensive in kwacha terms.
Recent commentary on Zambia's inflation has pointed to a relatively resilient kwacha as one factor helping to contain price pressures.
But this is not something households should take for granted.
A renewed weakening of the currency, combined with higher international commodity or fuel prices, could quickly feed into domestic costs.
That is particularly relevant because Zambia's inflation outlook remains exposed to global oil-price developments. The IMF has warned that higher global oil prices and geopolitical tensions could put renewed pressure on inflation and the exchange rate.
Then there is fuel
This may be one of the most important issues going forward.
Government has been using temporary tax relief on fuel — including the suspension of excise duty and zero-rating of VAT on petrol and diesel — as part of efforts to cushion consumers and businesses from high fuel costs. The current extension runs through September 30, 2026.
That matters because fuel is not just a line item on the household budget.
Fuel affects transport, distribution, agriculture, manufacturing and ultimately the price of goods in shops.
So as we move beyond September, one of the questions for the inflation outlook is how fuel prices will behave once these temporary measures expire.
The September inflation number therefore needs to be viewed as a snapshot, not the end of the story.
The real test is purchasing power
Ultimately, the most useful way to judge the cost-of-living situation is not simply to ask whether inflation is falling.
We should ask:
Are Zambians' incomes growing faster than the prices of the things they need?
If inflation falls from 10 percent to 6 percent but wages and household incomes are barely changing, families can still feel financially squeezed.
Conversely, if incomes grow faster than prices, households can experience an improvement in purchasing power.
That is why the conversation about inflation should move beyond the headline number.
6.1 percent is good information. But it is not the whole household story.
The encouraging part is that Zambia's annual inflation rate has been trending down for several months, reaching its lowest level since February 2018.
The caution is that monthly prices are still rising, non-food inflation remains at 6.6 percent, and important risks remain around fuel, the exchange rate and external commodity prices.
So the most accurate description of the current situation is perhaps this:
Zambia is seeing slower price increases, not lower prices.
And for households, the difference between those two statements is enormous.
