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Minister Patrick Chinamasa

Harare Bureau
THERE are fears that the country’s inflation rate will remain in negative as the current wave of job losses is expected to result in falling aggregate demand.

This comes as the annual inflation rate for July closed in the negative at minus 2,77 percent in spite of a 0.04 percentage point gain on the July rate.

Average inflation for 2015 is now projected at minus two percent against the original projection of minus one percent, Finance Minister Patrick Chinamasa said in his recent budget review.

The Zimbabwe National Statistical Agency has reported that average annual inflation rate came in at minus 2,77 percent in July from minus 2,81 percent the previous month.

“This means that prices as measured by the all items consumer price index decreased by an average minus 2,77 percentage points between July 2014 and July 2015,” Zimstat said.

Nearly 20,000 workers have lost their jobs during the last month following a Supreme Court ruling that resulted in employers using their common rights to dismiss workers on notice.

Analysts say this could result in weakened aggregate demand.

The year on year food and non alcoholic beverages inflation prone to transitory shocks stood at minus 3,65 percent while the non-food inflation rate was minus 2,35 percent.

The month on month inflation rate for the month of July 2015 was 0,06 percent, gaining 0,20 percentage points on the June 2015 rate of minus 0,14 percent, Zimstat said.

“This means that prices as measured by the all items CPI increased at an average rate of 0,06 percent from June 2015 to July 2015,” the national statistics agency said.

The month-on-month food and non alcoholic beverages inflation rate was minus 0,81 percent in July 2015, shedding 0,36 percentage points on the June rate of minus 0,45 percent.

ZimStat said that the month-on-month non-food rate of inflation stood at 0,47 percent in July, gaining 0,46 percentage points on the June 2015 inflation rate of 0,01 percent.

Inflation during the first half remained negative, at 2,8 percent by end of June, while monthly inflation gained 0.05 points to minus 0.14 percent from the May rate of minus 0,19 percent.

Major price declines were pronounced in food and non-alcoholic beverages; clothing and footwear; housing, water, electricity, gas and other fuels; communication; recreation and culture; restaurants and hotels; and miscellaneous goods and services.

This prompted a wave of gradual price reductions of products in Zimbabwe, as buying from South Africa became cheaper for local buyers who used stronger currency.

Price declines are expected to continue in the remainder of the year, with Minister Chinamasa saying the falling prices in the local economy reflects in part correction of domestic price structures.