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from 3,5 percent in January as the prices of food and non-alcoholic beverages stabilised.
Data released by the Zimbabwe National Statistical Agency yesterday indicated that month-on-month inflation in February was 0,5 percent, shedding 0,5 percentage points on January 2011 rate of 1 percent.
This means that prices as measured by the all-items Consumer Price Index increased by an average of 3 percentage points between February 2010 and February 2011 and by an average of 0,5 percentage points from January 2011 to February 2011.
The rate of inflation is expected to slow down further as both regional and international financiers continue to provide working capital to local industry.
However, the decline in annual inflation does not mean a decline in prices and consumers may feel the effect of this positive development until they get a salary increment as inflation only depicts the rate at which prices would have risen over a month or a year.
For the month of February, year-on-year food and non-alcoholic beverages inflation prone to transitory shocks, stood at 5,26 percent, while non-food inflation stood at 2 percent.
The month-on-month food and non-alcoholic beverages inflation stood at 0,37 percent in February 2011, shedding 0,91 percentage points on the January rate of 1,28 percent.
Non-food inflation stood at 0,54 percent shedding 0,38 percentage points on the January 2011 rate of 0,92 percent.
A recent spate of price increases by retailers that threatens to erode existing incomes has sparked another round of wage demands in both the civil service and the private sector.
Production capacities in companies have remained stagnant due to a myriad of factors, including lack of working capital resulting in employers failing to adjust salaries.
Retailers have continued to increase prices despite employers failing to award decent salaries in line with the prevailing economic environment.
The impact on already income-constrained consumers would be to further resort to lower-priced imported products, with adverse consequences for local production and employment.
Analysts yesterday said inflation pressures would be felt into the second quarter of the year, following recent increases in fuel and food prices.
Tariff adjustments for public utilities, health care, as well as the strengthening of the South African rand against the US dollar, are also expected to determine the country’s inflationary trends.
Failure by Finance Minister, Tendai Biti to put a tight lid on the resurgence of domestic inflation would only serve to reduce the competitiveness of local goods in both the domestic and export markets.
However, pressures can only be reduced by increased agricultural output, buoyed by tobacco, cotton and increased mineral sales.