TENDAIISHE NYAMUKUNDA
Zimbabwe’s inflation rate surged in the month of January as the Zimbabwe dollar rout drove up the prices of goods and services , creating concerns for consumer spending since it depletes real income, Business Times can report.
Annual inflation rate for January, according to ZIMSTATS, rose to 34.8% from 26.5% in December 2023.
The unprecedented dip in the value of the Zimbabwe dollar, which yesterday traded at between ZWL$16 000:US$1 and ZWL$17 000:US1 , up from ZWL$8 000 at the beginning of January 2024 on the parallel market left consumers stretching their dollars more for a few items.
On the formal market such as the willing seller-willing buyer, the Zimbabwe dollar was yesterday trading at ZWL$10 152: US$1, up from about ZWL$5 900 in January 2024.
According to ZIMSTATS the Consumer Price Index (CPI) was 120.67 in January 2024, 113.22 in December 2023 and in January 2023 the index was 89.49.
Between January 2023 and January 2024 the index rose by 31.18.
The month -on -month food and non-alcoholic Beverage inflation rate was 15.0% in January 2024, before gaining by 6.4 % points on the December 2023 rate of 8.4 %. January 2024 month -on -month non-food inflation rate was 2.5%, shedding 0.4%points on the December rate of 2.9 %.
In addition, ZIMSTATS said the continuous inflation rates were forcing the rise of prices of basic commodities and services , as well as the loss of value of Zimbabwe dollar against the US dollar.
According to economist, Dr. Prosper Chitambara, inflation has a significant negative influence on the economic standards because it undermines economic confidence, reduces economic competitiveness, and encourages income erosion.
“Inflation is an indirect tax on incomes so it affects businesses and consumers alike in that it causes an erosion of incomes, it also weakens confidence in the economy, it creates uncertainties and self-feeling expectations which then drives the inflation spiral, “Chitambara said.
He added: “So inflation is not good for the economy, it ultimately erodes our competitiveness as an economy.”
Chitambara added that this year’s inflation rate is probably going to soar.
“It is going to increase maybe for the next few months in the short term, then in the medium and long term it is going to depend on what the agriculture sector or agriculture performance if we have good, a normal season then there will be lesser pressure on food prices but if the output is below normal that is going to put a lot of pressure on food prices, ” Chitambara said.
