Zimbabwe’s annual inflation remained below 5% in May, the Reserve Bank of Zimbabwe’s Monetary Policy Committee (MPC) said, preserving one of the country’s most significant price-stability gains in recent years despite an external oil price shock that threatened to derail the disinflation trend.
The MPC, which met on June 15, said annual inflation eased to 4.4% in May from 4.8% in April, extending a run of single-digit inflation that has held since January and marking a dramatic turnaround from July 2025, when inflation surged to 95.8%.
The latest figures suggest Zimbabwe’s stabilisation efforts have so far withstood a major external test.
Month-on-month inflation accelerated from 0.5% in March to 1.1% in April as global oil prices pushed up domestic fuel costs. But the increase proved temporary, with monthly inflation retreating to 0.5% in May, indicating that the shock remained largely confined to the fuel sector and did not trigger broader price increases across the economy.
“The impact of the oil price shock was mainly felt directly through fuel price increases, with limited indirect and second-round effects on prices of goods and services in other sectors,” the MPC said in its resolution statement.
The committee attributed the muted pass-through effect to government measures to reduce fuel taxes and levies, businesses absorbing part of the higher operating costs instead of passing them on to consumers, and a gradual shift by some sectors towards alternative energy sources.
Economists often view the absence of so-called second-round effects as evidence that inflation expectations are becoming anchored. When households and businesses expect inflation to remain low, they are generally less inclined to demand higher wages or implement precautionary price increases, helping reinforce price stability.
The MPC said well-anchored inflation expectations had helped the country weather the recent oil price shock, pointing to restrained pricing behaviour by businesses during April despite higher fuel costs.
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The committee also cited improving prospects in global energy markets, saying “promising signals from the US-Iran peace deal” had contributed to a decline in oil prices, potentially easing imported inflation pressures on Zimbabwe’s fuel-dependent economy.
While the MPC statement did not provide full details of its forward guidance or any changes to interest rates, its overall tone suggested confidence that the disinflation trajectory remains intact.
The progress is particularly significant for Zimbabwe, where inflation carries deep historical sensitivities. The country’s hyperinflation crisis culminated in the abandonment of the Zimbabwe dollar in 2009 after inflation reached an estimated 89.7 sextillion percent in November 2008, eroding savings and public trust in monetary authorities.
Maintaining inflation below 5% will now test whether the policy framework underpinning the current stability is robust enough to withstand future shocks.
For the Reserve Bank of Zimbabwe, the challenge has shifted from restoring credibility to preserving it.
