Zimbabwe's December inflation fell within the 5 percent target set by the Reserve Bank of Zimbabwe (RBZ) and the International Monetary Fund (IMF) projection 7 percent, signalling significant progress towards authorities' objective of durable price stability.
The December 2024 inflation data, as reported by the Zimbabwe National Statistical Agency (ZimStat), paints a favourable picture when analysed across the Zimbabwe Gold (ZiG), United States dollar (USD), and weighted metrics.
The ZiG Consumer Price Index (ZiG CPI) stood at 166,30 in December, rising slightly from 160,41 in November. However, the month-on-month inflation rate fell significantly to 3,7 percent, an 8 percentage point drop from November's 11,7 percent.
ZimStat attributed this deceleration to stabilising prices, amid tight monetary and fiscal policies, particularly in the non-food sector, where inflation dropped from 9,7 percent to 3,2 percent.
Food and non-alcoholic beverages inflation also declined sharply from 15,7 percent to 4,6 percent.
"Prices, as measured by the all-items ZiG CPI, increased by an average of 3,7 percent between November and December 2024," ZimStat noted in its December bulletin.
The US dollar Consumer Price Index (USD CPI) saw a marginal rise, reaching 108,91 in December from 108,22 in November.
Month-on-month inflation in US dollar terms increased to 0,6 percent, reversing the previous month's near-zero growth. The food and non-alcoholic beverages category led this increase, jumping from 0,0 percent to 1,9 percent, while non-food inflation remained flat at 0,0 percent.
ZimStat also highlighted the annual inflation rate in US dollar terms at 2,5 percent, reflecting a modest rise in prices over the year.
"This means prices, as measured by the all-items USD CPI, increased by an average of 2,5 percent between December 2023 and December 2024," the agency stated.
The weighted Consumer Price Index, which combines US dollar and ZiG price movements using a geometric method, provides a balanced perspective.
The weighted CPI rose slightly to 112,39 in December from 111,15 in November. The month-on-month inflation rate eased to 1,1 percent, halving November's 2,2 percent increase.
Food and non-alcoholic beverages inflation in the weighted index fell to 2,8 percent from 5,2 percent, while non-food inflation dropped marginally to 0,2 percent from 0,7 percent. ZimStat explained,
"The weighted CPI reflects the combined price changes of goods and services in both currencies, providing a more comprehensive measure of inflation trends," the report read.
The divergence in inflation trends across currencies underscores the complexities of Zimbabwe's dual-currency economy.
While ZiG inflation fell within the RBZ threshold, it remained relatively higher but the deceleration suggests great stabilisation.
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Conversely, the slight up-tick in US dollar inflation signals potential vulnerabilities in imported goods or services priced in foreign currency.
Economic analysts caution that while weighted inflation provides a balanced view, the disparities between ZiG and US dollar inflation could pose challenges for policymakers aiming to harmonise economic conditions across currency zones.
As Zimbabwe enters 2025, inflation management will remain a priority.
The ability to sustain the current moderation in ZiG inflation, while keeping USD inflation under control, will be pivotal for economic stability.
