Zimbabwe: Inflation Stats Back

14 February 2020

Zimbabwe will start publishing year-on-year inflation statistics from this month, with the February 2019 to February 2020 figure expected next month.

This follows the building of data on prices in the mono-currency system for 12 months.

The development will help investors and businesspeople to make informed decisions.

The Zimbabwe National Statistical Agency (ZimStat), which collects and publishes the data, has indicated that it will widen the collection of prices data to involve more stakeholders.

Year-on-year inflation data is critical in salary negotiations, court judgments, pricing of assets and liabilities such as bank loans.

Finance and Economic Development Minister Professor Mthuli Ncube suspended the publication of year-on-year inflation data in July last year for 12 months from the February switch in currencies, a time limit that elapses this month.

It was felt that it was difficult to compare prices from the multi-currency period and the period after the liberalisation of the foreign currency market and the reintroduction of the Zimbabwe dollar.

Prices would, in effect, be compared in two currencies under two systems.

Monthly inflation rates were still being published.

ZimStat director-general Mr Taguma Mahonde yesterday said the organisation was ready to release data on year-on-year inflation.

"In February 2019, the Government of Zimbabwe introduced the RTGS dollar at an exchange rate of US$1:2,5RTGS," he said.

"This was followed by Statutory Instrument 142 of 2019 that ushered in a mono-currency regime.

"These monetary policy reforms impacted on the computation of consumer price indices, as prices for the period prior to the introduction of the RTGS dollar were informed by multi-currency. As such, computation of year-on-year rate of inflation was no longer comparing like with like.

"Resultantly, computation and publication of the year-on-year rate of inflation was deferred for a period of 12 months to February 2020.

"Given that now ZimStat has a full base year of RTGS consumer price indices, computation and publication of year-on-year rate of inflation will resume from the month of February 2020, to be published in March 2020. Further, ZimStat will enhance its prices data collection exercise to engage more stakeholders across all the districts of Zimbabwe."

Economist Mr Eddie Cross said publishing year-on-year inflation data was "important as it guides market makers and others".

Another economist Mr Persistence Gwanyanya said it was now possible for ZimStat to start publishing annual inflation statistics as Zimbabwe had "now reached full financial cycle, which is necessary for comparison purposes".

"In simple terms, we can now compare like to like," he said.

"We can now compare apples to apples; we can now compare oranges to oranges; we can now compare RTGS$ to RTGS$.

"It is important to publish year-on-year inflation because a number of economic and financial decisions are based on this statistic. Take for example wage negotiations, court judgments, pricing of assets and liabilities such as bank loans and investments, Treasury Bills and other financial instruments.

"As we witnessed, if you stop publishing official annual inflation as a country, others will do so and you will leave the market with no chance but to follow them, even dubious ones, which has far-reaching consequences for the economy as the market uses whatever they want, for whatever they want to achieve."

During the time that Government was not releasing year-on-year inflation data, economists such as US-based Professor Steve Hanke, started publishing what they thought were the inflation statistics.

Prof Hanke's figures were questioned by other economists who doubted the methodology he used.

Stopping publication of annual inflation statistics is not new in Zimbabwe, as it was done before adoption of the multi-currency regime in 2009.

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