HomeNewsOil, food prices pose risk to local inflation

Oil, food prices pose risk to local inflation

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Significant increases in international oil prices and global food prices, which are projected to continue firming in the short to medium term, remain a risk to domestic inflation.

Annual headline inflation, which has been on a downward trend since the beginning of the year rose for the first time this year from 2,5% in May to 2,9% in June.

In an analysis of the June inflation trends the Reserve Bank of Zimbabwe (RBZ) said the surge in annual inflation was driven by both food and non-food inflation.

Annual food inflation accelerated from 2,3% in May to 3% in June while non-food inflation rose from 2,6% in may to 2,8% in June.

Month-on-month food inflation quickened from -0,07% in May to 0,12% in June.

“Month-on-month food inflation was mainly driven by vegetables, mineral water, soft drinks and fruit juices, meat, bread and cereals,” RBZ said in its analysis.

“The worsening cold weather conditions impact negatively on vegetable output thereby fuelling vegetable prices.”

Monthly non-food inflation stood at 0,3% in June compared to 0,14% in May 2011 driven by housing rents, water, electricity and gas. The central bank said the country’s inflation of 2,9% as of June remained low compared to the region and is likely to be influenced by the developments in the US$/South African rand exchange rates and international oil prices.

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