ZIMBABWE’S annual inflation shed 0,17 percentage points to 0,14% in July, the Zimbabwe National Statistical Agency (ZimStat) said yesterday.
BY FIDELITY MHLANGA
This means that prices as measured by the all items consumer price index increased by an average of 0,14 percentage points between July 2016 and July 2017, Zimstat said.
“The year on year Food and Non Alcoholic beverages inflation prone to transitory shocks stood at 1,92% whilst the Non-food inflation rate was -0,67%. The month on month Food and Non Alcoholic Beverages inflation rate stood at -0,42% in July 2017, gaining 0,03 percentage points on the June 2017 rate of -0,45%. The month on month non-food inflation rate stood at -0,33%, shedding 0,19 percentage points on the June 2017 rate of -0,14%,” Zimstat said.
In June inflation stood at 0,31%, after shedding 0,43 percentage points on the May 2017 rate of 0,75%. In April, year-on-year inflation, was 0,48%, meaning it gained by 0,27 percentage points.
Zimbabwe first slipped out of deflation in February after year-on-year inflation for the month stood at 0,06%, after gaining 0,71 percentage points on the January rate.
The International Monetary Fund has projected that Zimbabwe’s annual inflation rate will close the year at 5%.
Economist Prosper Chitambara said the current inflation rate was not reflective of the situation obtaining in the economy.
“There is a paradox (on what Zimstats say and what is on the ground) in the sense that the cost of production remains high yet the rate of inflation is low. This is caused by low levels of aggregate demand. So the rates of inflation are not reflective of the high cost of production prevailing on the ground,” Chitambara said.
“For example when you compare the purchasing power parity the price of a bag of cement in Zimbabwe is twice higher than that of Zambia. Generally the prices in Zimbabwe are higher than our regional counterparts,” he said. In a 2017 first half report, research firm MMC Capital said annual inflation would end the year at 1,5% due to low consumer purchasing power.
The research firm said local inflation numbers would chiefly be influenced by four major factors outlook on the South African rand, global oil prices, local consumers’ purchasing power and premium between US dollar cash and Real Time Gross Settlement (RTGS) balance.
The biting cash crisis has seen the advent of a three-tier pricing system, where discounts are offered depending on the method of payment which is in form of US dollar, bond notes, mobile money or RTGS transfer.