Zim’s inflation now 521 percent: CZI

ZIMBABWE’s year-on-year inflation rate spiralled to 521 percent in December last year, from 481 percent in November, according to the Confederation of Zimbabwe Industries (CZI).
This comes as the Zimbabwe National Statistics Agency (Zimstat) last week announced that month-on-month inflation rate shed 0,91 percentage points in December to 16,55 percent from 17,46 percent in November, latest figures show.
“Zimbabwe’s implied annual inflation rate surged from 481 percent in November 2019 to an implied rate of 521 percent in December 2019.
“This is an implied rate after Zimstat suspended the publication of year-on-year inflation data for technical reasons when the economy moved from a multi-currency to a mono-currency regime,” CZI said.
According to the Zimstat, month-on-month food and non-alcoholic beverages inflation rate stood at 15,75 percent in December 2019, shedding 6,88 percentage points on the November 2019 rate of 22,63 percent.
“The month-on-month non-food inflation rate stood at 17,14 percent, gaining 3,20 percentage points on the November 2019 rate of 13,94 percent,” Zimstat added.
In an analysis of Zimstat’s December month-on-month inflation, the country’s largest business member organisation said the country’s inflation rate was likely to continue rising on the back of the prevailing drought which would result in Zimbabwe importing a lot of food after failing to produce enough to meet national demand.
“The impact of drought induced shortages on food items will result in higher prices for the food sub group. The current calls to increase wages and salaries will result in demand pull inflation as workers’ spending power increases … Cost push inflation will emanate from producers adjusting prices to offset labour costs increases,” said CZI.
“There is need to mitigate the catastrophic effects of drought on agriculture by reducing reliance on rain fed agriculture and increased efforts to harvest rain water in the long term and in the short term the commodity and food deficit needs to be financed in non-inflationary ways.
“In order to deal with entrenched inflation expectations, there is need for policy realignment between Fiscal and Monetary policies in an effort to deal with the confidence gap”.
“The economy is experiencing stagflation where prices continue to rise against contracting output and this phenomenon will be heightened this year,” said CZI.
CZI added that the fall in output will also lead to low export volumes and revenue leading to volatility in the exchange rate with pass through effects on inflation.
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