The country’s inflation rate is within manageable levels despite recording gains over the months, economists have said.
BY FIDELITY MHLANGA
The year-on-year inflation rate for March was 0,21% after gaining 0,15 percentage points on the February figures.
Zimbabwe first slipped out of deflation in February after year-on-year inflation for the month stood at 0,06% from the January figures of -0,65%.
Economist John Robertson said the growth in the inflation rate was insignificant and there was no cause for panic.
“The change is very small. We are in inflation, but it’s not yet serious. It’s a small figure, but if it’s get more than 2% it will be considered serious,” he said.
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Another economist, Kipson Gundani, said level of the inflation rate was still healthy, adding that chances for it to skyrocket were slim.
“The inflation range is still healthy and we should not panic. Prospects of it rising to economically retrogressive models are very slim. As long as the year on year rate does not exceed 5%, we have every reason to feel ok,” Gundani said.
Official statistics showed Zimbabwe’s inflation peaked to 231 million percent in 2008. Independent statistics estimated inflation to have surpassed 500 million percent.
Robertson said there was need for money supply discipline by the Reserve bank of Zimbabwe to douse any chances of retreating back to hyperinflation.
Economist Clemence Machadu said Zimbabwe was entering into a different era with interplay of new factors threatening its health.
“Although the March gain has relatively declined compared to the two prior months, inflation is certainly a new threat in our new economic season, although we cannot call it the “Number One enemy” as in the days of Gideon Gono,” he said projecting inflation to close the year at 7%.
“This estimate is informed by a number of factors: fuel prices are going up on the international market following supply cuts by OPEC; the US is planning more interest rate hikes this year which will increase the cost of borrowing, forex shortages have led to currencies now being traded on the black market where a premium is charged; protectionist measures that have been put in place have removed the cheaper imports on the market, leaving consumers exposed to relatively expensive local products as well as other factors.”
Machadu said anything that eats into the pockets of the consumer was not good as consumers’ real spending levels are depleted and they will now buy only a few goods with the same amount of money than before, which means that industries will also be compelled to trim production.
“For companies, rising inflation also implies high input costs which mean higher factors of production and those costs will be passed onto consumers. Bottom line is that our competitiveness will be threatened as an economy,” he said.