HomeLocal NewsInflation drops to 56% as poverty datum line increases

Inflation drops to 56% as poverty datum line increases



THE Zimbabwe National Statistical Agency (ZimStats) yesterday said the country’s year-on-year inflation figure eased to 56,37% in July, down from 106,4% in June.

ZimStats also said the total consumption poverty line (TCPL) had shot up to $6 126,41 per individual in July, while in June, a single person needed $5 974,89 monthly to survive in the country.

The new statistics show that year-on-year inflation rate had dropped to two digit figures for the first time since 2019.

The month-on-month inflation in July was 2,56%, shedding 1,32 percentage points on the June rate of 3,88%.

When government introduced the Zimbabwe dollar as the sole legal tender in 2019, through Statutory Instrument 142 of 2019, inflation soared to three digit figures.

The inflation rate shot above 800% in July last year as the local currency was severely weakened, and incomes and pensions which were indexed to the local currency were decimated as a result of SI 142 of 2019.

Government then made a U-turn last year and brought back the multi-currency regime ostensibly to ameliorate the impact of the COVID-19 pandemic.

The introduction of the foreign currency auction system in June last year, and the crackdown on mobile money transactions helped to slow down the rate of inflation.

However, as the inflation rate falls, the TCPL continues to increase.

The TCPL takes into consideration the amount an individual needs to purchase food and non-food items in order for them not to be deemed poor.

But SI 127 of 2021 triggered a wave of price hikes in local and foreign currencies.

Soon after the release of the ZimStats statement, President Emmerson Mnangagwa tweeted: “More good news for Zimbabwe, inflation dropping, exports rising by 9,5% since April, the biggest harvest in 20 years. Zimbabweans, we are on the cusp of greatness.”

Economist Prosper Chitambara said: “What the statistics mean is that there has been a slowdown in price increases from July last year to July this year. Although there has been some stability, it is still fragile.”

He said as the inflation slowdown continued in July 2021, enhanced output in 2021 should help to moderate price increases.

Chitambara, however, warned that downside risks remained with respect to pressures on public expenditure and the exchange rate on account of the discrepancy between supply and demand.

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