Financial Gazette (Harare)
Chris Muronzi Staff Reporter
8 February 2007
Harare — JANUARY inflation will reach new record highs around 1500 percent, pushed largely by continued rise of consumer goods and fuel, analysts have said.
According to a Financial Gazette poll of analysts and economists this week, the market expects annual inflation to come in a range between 1400 percent and 1595 percent. The Central Statistical Office (CSO) is expected to release January data tomorrow.
Best Doroh of ZB Financial Holdings sees inflation up, pushed by high growth in money supply and general increase in basic commodities.
"(We) forecast 1595 percent for January 2007, on the back of continued high growth in money supply, increases in prices of basic commodities, ahead of the MPS and continued foreign currency shortages, translating into high premium for foreign currency on the parallel market," said Doroh.
"In the short-term, inflation is expected to maintain an upward trend, underpinned by higher food inflation owing to the low food supply period to March 2007 as well as increases in transport, clothing and footwear and restaurants and hotel costs during the festive season. The recent adjustment in electricity charges by ZESA is also expected to result in a direct increase in domestic power and electricity inflation, particularly in November."
Other analysts say continued foreign currency shortages and incessant weakening of the local unit would have taken its toll on January inflation.
Zimbabwe Allied Banking Group (ZABG) group treasurer Andy Hodges sees inflation up to 1350 percent in January and up to 1450 percent this month.
"High prices of goods will definitely affect inflation but I don't see the figure changing that much. I don't see any serious changes because the only increases on basic commodities have rather been in the past week. I see inflation at 1350 (January) and 1450 percent (February) owing to the increase we have seen in the past week," said Hodges.
Zimbabwe's annual inflation quickened to a record 1 283.1 percent in December, coming in at the top end of our poll last month.
Government has projected that inflation - which it has labeled the country's number one enemy - would slow to 350-400 percent by the end of this year, but analysts are wary of the forecasts.
Central bank governor Gideon Gono admitted during his monetary policy review statement last week that quasi-fiscal expenditures had contributed to the high rate of inflation.
Analysts say curbing government expenditure will be key to slowing down inflation.
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