Harare — Monthly inflation for August dropped 19,8 percentage points to fresh two-year lows at 11,8 percent while annual inflation for the same month also declined to 6 592,8 percent, from the July peak of 7 634,8 percent, the Central Statistical Office said yesterday.

This is also the second straight monthly decline spawned by the Government's price controls imposed on June 25. In July, month-on-month inflation slowed to 31,6 percent from 86,2 percent in June, the biggest decline in seven years. CSO said the August year-on-year rate of inflation broke an 11-month surging spree to 6 592,8 percent, shedding 1 042,0 percentage points.

Annual inflation has maintained an upward trend since falling to 1 023 percent last September. Between April and June this year, yearly inflation has climbed an average 1 700 percent. Although prices of several goods and services have been allowed to rise, price increases have relatively remained steady between July and now. This has helped contain inflation growth. Month-on-month, food and non-alcoholic beverages' fell to 14,5 percent from 25 percent previously. Non-food inflation fell faster though, dropping 25,7 percentage points to 10,2 percent, trekking similar trends year-on-year. For the year, food and non-alcoholic beverage inflation fell to 7 908 percent while non-food inflation dragged to 5 983 percent from 7 152 percent previously.

Food inflation, with a basket weighting of 31.9 percent, has been one of the major drivers of inflation in recent years. The all items index rose 17 171 312.8 points from 15 358 172.2 points in July. The new month-on-month inflation figure has also surpassed the social contract target of 20 percent monthly inflation by year-end. But this does not mean inflation will not rise between now and December. What it means is that stable prices seen between July and August have helped the slower growth in inflation. Monthly inflation can still rise, but at more reasonable rates. Already, economists predict the recent increases in prices of several products and services will push inflation slightly higher in September.

But they hoped that pricing formulas being worked out by Government and business would bring some pricing sense to the market, in a win-win situation for business and consumers.