Oliver Kazunga, Senior Business Reporter
ZIMBABWE’s rate of inflation will remain high until October this year and is likely to go into the negative going into early next year, Finance and Economic Development Minister Professor Mthuli Ncube has said.
Latest figures released by the Zimbabwe National Statistics Agency (ZimStat) this week show that the country’s month-on-month inflation rate rose by 1,14 percentage points to 5,52 percent in April from 4,38 percent in March.
ZimStat also indicated that year-on-year inflation last month as measured by all items Consumer Price Index stood at 75,86 percent, while that of March was 66,80 percent.
This means that prices as measured by the all items Consumer Price Index increased by an average of 75,86 percent between April 2018 and April 2019.
Responding to questions in Parliament on Wednesday, Prof Ncube said:
“I will be on record to say that inflation will remain high until about October this year, that is our prognosis. After that, it is expected to fall right into early next year.
“Our reasons are as follows; the increase in inflation is also due to a technical factor in the sense that when the inflation picked up in October last year to about 16 percent just for that month alone, that shifted the index to a higher level and the way inflation is measured you always compare the level of index from the previous year to the current year.
“If you take the index this time last year and you compare that to the index now you have that gap and that gap is the 66 percent (before the release of latest ZimStat figures).”
Despite being on the high side on a yearly basis, Prof Ncube highlighted that Zimbabwe’s month-on-month inflation was still on the lower side since the beginning of the year.
“If you work out the inflation on a month- to-month basis from January to February and March, that inflation level remains low and I would not be surprised if in effect it begins to decline and goes into negative.
“While the year-on-year inflation is high, the month-to-month inflation is low and that is a technical explanation,” said Prof Ncube.
A renowned economic analyst Dr Gift Mugano has also hinted that Zimbabwe was likely to experience a decline in inflation as the year progresses owing to slackening demand on the market due to customers’ limited buying power.
Of late, basic commodities’ prices have been skyrocketing, going miles beyond the reach of many ordinary citizens.
Low demand has already begun to manifest in the economy as some reputable companies have started reverting to lower prices. — @okazunga.