ZIMBABWEAN households may face renewed price pressures from mid‑2026, with United States dollar inflation expected to rise despite recent gains in agricultural output and anticipated relief from falling food prices, analysts say.
That caution comes amid a mixed inflation picture, where both the local Zimbabwe Gold (ZiG) currency and US dollar price indicators have shown notable cooling but face renewed upward risks from taxes, import costs and stronger domestic demand.
In its latest economic outlook, Morgan & Co highlighted that stability in exchange rates during 2025 — including a reported 13% ZiG appreciation in the parallel market and a modest 2% depreciation on the official market — helped moderate inflationary pressures.
According to the firm’s report, this resulted in monthly ZiG inflation averaging around 0,3% in 2025, with year‑on‑year ZiG inflation falling sharply from 85,7% in April to 15,0% in December 2025.
With year‑on‑year US dollar inflation also decelerating, the securities firm forecasted an initial dip to about 3% in January 2026 before inflation begins creeping upward through the year.
“A combination of pass-through effects of taxes and levies, a weaker US dollar on imports, and stronger aggregate demand backed by mining and agriculture sector output will likely keep US dollar CPI on an upward trajectory from the second quarter onwards regardless of the potential decline in food inflation on account of a consecutive bumper harvest,” the report said.
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Approximately 80% of transactions in Zimbabwe are settled in greenback.
Morgan & Co also anticipates that year‑on‑year ZiG inflation will remain below 10% in the first half of 2026, thanks to the continued effects of tight monetary policy and incentives for price moderation that encourage sales in the local currency.
However, the firm warned that ZiG inflation pressures could also emerge later in the year due to the same fundamentals pushing the USD CPI upwards.
The Confederation of Zimbabwe Industries (CZI), in its inflation and currency developments report, noted that ZiG month‑on‑month inflation began 2026 at a very low level — around 0,0% in January — compared with 0,2% in December 2025.
Such subdued monthly rates, CZI said, are “supportive of economic activity”, helping preserve purchasing power, enhance price certainty and foster confidence in the local currency.
The CZI also reported that US dollar month‑on‑month inflation started the year at just 0,2%, further suggesting a largely stable pricing environment without major shocks over the period — a trend that the industry group said could allow businesses and stakeholders to focus on internal strategies.
“In the outlook, it is expected that these stable economic conditions and prudent policies will be maintained,” the industry body said. “Thus, the ZiG is projected to remain within single-digit inflation territory over the short to medium-term.”
Zimbabwe has battled chronic inflation for years, with rates spiralling to extreme levels as recently as 2024 when annual inflation topped global charts amid currency volatility.
Authorities have since pursued tight monetary policy and exchange rate stabilisation, and in early 2026 both ZiG and weighted annual inflation rates have shown significant moderation, with some official estimates even indicating single‑digit annual figures not seen since the 1990s.
Despite these gains, analysts cautioned that sustaining price stability will hinge on managing fiscal pass‑through costs, import price pressures and strong demand from key sectors such as mining and agriculture — all of which could re‑ignite inflationary pressures as the year progresses.