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Zimbabwe registers deflation for fourth month in a row

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ZIMBABWE has registered deflation for the fourth month in a row since February this year, reflecting a slowdown in economic activity

ZIMBABWE has registered deflation for the fourth month in a row since February this year, reflecting a slowdown in economic activity.

VICTORIA MTOMBA BUSINESS REPORTER

Figures from the Zimbabwe National Statistics Agency show that the year-on-year inflation rate for the month of May 2014 as measured by the all-items Consumer Price Index (CPI) stood at -0,19%, gained 0,07 percentage points on the April rate of 0,26%. Deflation is a decrease in the general price level of goods and services.

This means that prices as measured by the all-items CPI decreased by an average of 0,19 percentage points between May 2013 and May 2014.

The year-on-year inflation rate is given by the percentage change in the index of the relevant month of the current year compared with the index of the same month in the previous year.

A local analyst said this showed that the economy had been slowing down due to liquidity problems in the economy. The figures also support World Bank growth prospects for Zimbabwe which they project at 2% from 3% previously.

“The economy is now literally under care and maintenance due to lack of capital to stimulate growth. Failure to attract capital flows may see this trend persisting as aggregate demand continues to weaken. The weakening of the rand is not helping Zimbabwe as most goods being imported are invoiced in United States dollar terms,” the analyst said.

Retailers have recorded reduced sales as people do not have disposable income with others closing shop due to viability challenges in the first five months of this year.

The year-on-year food and non-alcoholic beverages inflation prone to transitory shocks stood at -3,75% while the non-food inflation rate was 1,62%.

The month-on-month inflation rate in May 2014 was -0,13% shedding 0,71 percentage points on the April 2014 rate of 0,58%.

This means that prices as measured by the all-items CPI decreased at an average rate of 0,13% from April 2014 to May 2014.

The month-on-month food and non-alcoholic beverages inflation stood at -0,30% in May 2014, gaining 0,16 percentage points on the April 2014 rate of -0,46%. The month on-month non-food inflation stood at -0,05%, shedding -1,14 percentage points on the April 2014 rate of 1,09%.

In February this year the country recorded a deflation figure of -0,49% and in March it stood at -0,91%.