Inflation remains ‘a concern’

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CONCERNS remain over the destabilising impacts of currency volatility on the economy, with monthly inflation having shot up by two percent in November to 4,5 percent, the biggest rise since May.
Year-on-year inflation for the month was 21,6 percent, compared to 17,8 percent in October.
Economic analyst Prosper Chitambara said the relatively sharp rise in inflation during the month was worrying because it came at a time when global inflation was retreating.

“It means that we need to sustain the macro-economic reform agenda, fiscal discipline and monetary discipline and of course implementing institutional reforms that are critical in terms of a restoration of macroeconomic confidence.
“Of course, no economy can thrive in an environment of high inflation, especially the annual inflation rate, we need to bring it down to at least below 20 percent if we can bring it down even further, that’s actually even better because when you look at say the Sadc region, we actually have the highest annual inflation rate in the region.
“So, that obviously then leaves us in a very invidious position especially as far as attracting or unlocking our potential to attract greater investment inflow is concerned.”
Another analyst, Yona Banda said even though inflation remained high, the economy was still relatively stable compared to recent spells.
“I think the liquidity and fiscal tightening efforts are having some effect, and inflation looks to be slowing down as a result,” Banda said.
Inflation maintained a downward trend, declining from 101,5 percent in December 2022, to 75,2 percent in April 2023, on account of tight monetary conditions.
Inflationary pressures, however, re-emerged from April to June 2023, driven mainly by exchange rate depreciation.
Inflation increased to 86,5 percent and 175,8 percent in May and June 2023. Similarly monthly inflation, which was stable since the beginning of the year, rose in May to 15,7 percent and peaked at 74,5 percent in June 2023.
Inflationary pressures, however, dissipated after the government instituted a raft of economic measures in May, which included the liberalisation of the foreign exchange market, which was supported by the takeover of the central bank’s external liabilities and the requirement for duties and taxes to be paid in local currency.
Monthly inflation declined from the peak of 74,5 percent in June 2023 to -15,3 percent in July 2023.
Even though it has since picked up, it is still well below the central bank’s year-end projections of between 60 and 70 percent year-on-year.
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