Inflation weighing down competitiveness
LIVINGSTONE MARUFU
Zimbabwe’s high inflation is weighing down its competitiveness against other regional countries amid indications that the high cost of doing business is causing goods and services to be very expensive, the Confederation of Zimbabwe Industries (CZI) has said.
Although Zimbabwe’s annual inflation rate eased to 255% in November from 268.8% in October, the inflation rate level remained high.
In its latest report, CZI said at that level, Zimbabwe’s inflation was more than 10 times higher than some regional counterparts.
“Zimbabwe’s inflation is weighing down its competitiveness against regional counterparts. The rest of the world experienced some sort of inflation due to the effects of the Russia-Ukraine war as well as the effects of the structural challenges due to the Covid-19 pandemic.
“However, for Zimbabwe, this came at a time the country was already dealing with inflation. As the effects of these global geopolitical developments start to wane, countries are experiencing a decline in inflation,” CZI said.
It continued: “This still emphasises the presence of strong endogenous factors that have been driving inflation in Zimbabwe. In September 2022, Zimbabwe’s annual inflation was 15 times higher than in Angola, the country with the second highest inflation in SADC.
“The inflationary environment weighs down on Zimbabwe’s competitiveness, as domestic prices of goods end up being higher compared to what low inflation countries are selling at.”
CZI said electricity, transport services and hospital services were critical services for the day-to-day living of the populace. An increase in the prices of such services exposes vulnerable groups.
Even food inflation is way above the average annual inflation, which reinforces the point that the poor are being hit hard by inflation.
The food poverty line (FPL) as of October 2022 stood at ZWL$21,454.60, meaning that the minimum needed food basket cost ZWL$21 454.60 per person in October 2022.
Percentage changes in FPL move in tandem with inflation, which clearly shows that controlling inflation remains the only way of avoiding worsening poverty.
