17 August 2018

Zimbabwe: Inflation Rises to 4,29%

Photo: Kate Lucy/AllAfrica
(file photo).

Zimbabwe's annual inflation rate rose 1,38 percent to 4,29 percent in July, latest figures from the Zimbabwe National Statistics Agency (ZImStats) show.

This was a significant upturn from the June 2018 figure of 2,91 percent.

On a monthly basis, the inflation rose 1,03 percentage points to 0,98 percent.

"The month-on-month inflation rate in July 2018 was 0,98 percent gaining 1,03 percentage points on the June 2018 rate of -0,05 percent," said ZimStats in its monthly update.

Some observers have attributed the quickening inflation to the continuance of the parallel currency market. Zimbabwe uses a basket of currencies dominated by the US dollar, as well as financial instruments -- the bond notes, which are guaranteed by an international financial organisation.

Although the Reserve Bank of Zimbabwe (RBZ) has pegged and maintained the US dollar-bond note official rate at 1:1, cash shortages have resulted in a thriving black market for physical currency, both bond notes and United States dollar notes.

And it is largely expected that the high demand for US dollars by both companies and individuals continues to push up the exchange rate.

According to a report by our sister paper, Business Weekly, Zimbabwe can afford increases in annual inflation under the multi-currency regime to a maximum of 4,6 percent without hurting optimal economic growth thresholds, empirical evidence from a study conducted by the RBZ.

"Under multi-currency, Zimbabwe's inflation can rise to 4,6 percent without necessarily hurting economic growth. Beyond 4,6 percent, however, inflation will contribute negatively to growth," reads part of the report. -- BH24

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