Economy still in deflation: Zimstat

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The year-on-year inflation rate for the month of April stood at -1,64% gaining 0,66 percentage points on the March rate of -2,31%, raising hopes the economy would move out of deflation, statistical agency, Zimstat has said.

BY BUSINESS REPORTER

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This means that prices, as measured by the all items Consumer Price Index, decreased by an average of -1,64 percentage points between April 2015 and April 2016.

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.

Inflation has remained in the negative territory since the fourth quarter of 2014, a reflection of the constraining effect of tight liquidity conditions.

In his January monetary policy statement, Reserve Bank of Zimbabwe governor, John Mangudya said the central bank was committed to addressing negative inflation by plugging leakages of liquidity from the economy.

More than $1,8 billion was reportedly externalised by individuals and corporates last year, draining the country of liquidity, according to statistics from the central bank.

“Circulating this liquidity within the national economy has a great multiplier effect and has a positive contribution to boosting aggregate demand,” Mangudya said.

6 COMMENTS

  1. Someone help me understand. Inflation is not good for the economy/business fine but what is wrong with deflation?

    • in a deflation people do not spend, and without spedning, the economy will grind to a halt.

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  2. The important thing is that inflation has to be kept very low and should vary significantly month-on-month.

  3. The important thing is that inflation has to be kept very low and should not vary significantly month-on-month.

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