Taurai Mangudhla
HARARE – Zimbabwe’s annual inflation rate is seen rising further into the year largely on the currency distortions, which are continuously pushing up prices.
With the make or break elections, now only eleven days away, business is factoring in the risk of elections in their pricing with the inflation rate expected to pick up even further into the year if there is no confidence post the polls.
Currency distortions arising from black market exchange rates on the US dollar against electronic balances and bond notes is also driving inflation given that industry is failing to access foreign currency to import.
This has arguably created disparities between official inflation and real feel inflation, being experienced by consumers.
The disparities usually appear in high income households that largely depend on imported items which, although not part of our basket of basics, constitute their essentials.
This begs the question of whether or not Zimbabwe needs to reintroduce two inflation tiers, as in the Rhodesian era. There has even been debate around introducing industrial, mining, agricultural and procurement inflation.
Economic analyst Batanai Matsika of Akribos research said inflation is currently being driven by speculation ahead of elections an indicator of uncertainty.
“People are parking their money ahead of elections and this creates a demand for hard currency especially for economic agents such as manufacturers who end up going to the black market.
“The industry will then factor the cost of currency into their pricing structure. This will drive prices up” he said.
Annual inflation opened 2018 at 3,5 percent before dropping to 3,0 percent in February and slowing down further to 2,7 percent from march to May. It is in June that it went up marginally to 2,91 percent.
Latest figures obtained from Zimstat show the year on year inflation rate (annual percentage change) for the month of June 2018 as measured by the all items Consumer Price Index (CPI) stood at 2,91 percent, gaining 0,20 percentage points on the May 2018 rate of 2,71 percent.
This means that prices as measured by the all items CPI increased by an average of 2,91 percent between June 2017 and June 2018.
The year on year food and non-alcoholic beverages inflation prone to transitory shocks stood at 5,12 percent whilst the non-food inflation rate was 1,88 percent while the month on month inflation rate in June 2018 was -0,05 percent shedding 0,08 percentage points on the May 2018 rate of 0,03 percent.
The month on month food and non-alcoholic beverages inflation rate stood at -0,23 percent in June 2018, shedding 0,25 percentage points on the May 2018 rate of 0,02 percent. The month on month non-food inflation rate stood at 0,04 percent, gaining 0,01 percentage points on the May 2018 rate of 0,03 percent.
