THE Confederation of Zimbabwe Industries (CZI) has tempered the jubilation over the return to single-digit inflation, warning that the outcome remains fragile without continued discipline in monetary and fiscal policy.
Last month, the Zimbabwe National Statistics Agency (Zimstat) reported a ZiG annual inflation rate of 4,1%, which the government and the Reserve Bank of Zimbabwe (RBZ) have used to justify their current policies as working.
However, with the informal sector forming 76,1%, according to Zimstat, with just 23,9% of formal activity, the inflation data captures less than a quarter of actual economic activity.
Consequently, this excludes most cash-based trading, informal forex pricing, parallel-market dynamics, and declining consumer spending owing to reduced disposable incomes and says little about households' experiences with prices.
Back in December 2023, the International Monetary Fund revealed anomalies in the way economic data is collated at Zimstat, which came on the heels of the World Bank raising concerns in how the government is using data to determine key economic metrics.
“On a year-on-year basis, ZiG inflation declined sharply to 4,1% in January 2026, down from 15% in December 2025, representing a significant drop of 10,9 percentage points. This marks a return to single-digit annual inflation, a milestone that has not been attained for an extended period,” CZI said in its new January 2026 Inflation and Currency Developments report.
“The attainment of single digit inflation also exposed a serious gap in Zimbabwe’s historical statistical archives, as various sources cite different periods as the last month and year in which Zimbabwe experienced single digit inflation. Annual average trends show that Zimbabwe last had an annual average inflation in single digits for local currency in 1988.”
CZI said single-digit inflation reflected improved macroeconomic management and strengthened price stability.
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“Sustained low month-on-month inflation has been a key driver of this outcome. Continued discipline in monetary and fiscal policy will be essential to preserve these gains,” CZI said.
“Indications are that the current conditions are likely to be maintained going forward, hence the low inflation environment is likely to remain in place into the second quarter of 2026.”
ZiG single-digit inflation has been achieved amid aggressive liquidity tightening by the RBZ, limiting money supply growth to support exchange-rate stability and contain inflation.
However, the approach has also deepened liquidity shortages across the economy, weighing on formal-sector activity, constraining business financing and investment, and reinforcing concerns that the inflation gains reflect subdued demand rather than a durable, growth-driven recovery.
Further, CZI noted that with the U.S. dollar year-on-year inflation rate for January declining sharply to 1%, an 11,4 percentage point drop, this is lower than what was recorded in the United States itself.
“The USD inflation rate in the United States of America (USA) was 2,7% in December 2025. Traditionally, the USD inflation recorded in Zimbabwe was higher than the rate recorded in USA, reflecting distortions that created inflationary pressures,” CZI said.
“Achieving a USD inflation rate that is broadly aligned with USA inflation would therefore represent a significant confidence building development, signalling that the legacy of “fictitious” USD created in Zimbabwe in earlier years has effectively been addressed.”
Consequently, this does not necessarily signal a sign of underlying strength, as it may reflect subdued domestic demand, weak incomes, and constrained pricing power rather than productivity gains, competitiveness, or broad-based economic expansion.
This is especially true as a large share of pricing, transactions, and wage formation occurs outside the formal system, limiting the extent to which official inflation fully captures underlying cost pressures and exchange-rate dynamics.
