Forecasting Inflation Rates in Zambia: Time Series Analysis with the Holt Model

This study aims to forecast the inflation rates in Zambia in the near future using the Holt model for time series analysis. It analyzes the inflation rate in Zambia, considering its implications for the economy, particularly in terms of reduced purchasing power, investment constraints, and distorted resource allocation. The study examines the factors influencing inflation, such as money supply, exchange rate movements, and fiscal policy. Data from the IMF website, spanning from 1980 to 2022, was used for analysis, and the Holt model was applied using SPSS software for forecasting. The model's reliability and accuracy were assessed through statistical measures, including R-squared, Stationary R-squared, RMSE, MAPE, and MAE. The findings indicate that the Holt model provides a good fit to the data, highlighting its effectiveness in forecasting inflation. The high inflation rate in Zambia has led to escalating food and fuel prices, prompting the government to remove subsidies to address fiscal imbalances. These insights can inform policymakers, researchers, and businesses in making informed decisions to manage inflation and promote economic stability in Zambia.