Inflation increases

Oliver Kazunga, Senior Business Reporter
ZIMBABWE’S year-on-year inflation rose to 5,39 percent last month from 4,83 percent in August largely triggered by the parallel market exchange rate forces.

Statistics from the Zimbabwe National Statistics Agency (Zimstat) released last week also show that the month-on-month, inflation stood at 0,92 percent after gaining 0.53 percentage points from 0.39 percent last month.

In separate interviews yesterday, economic commentators said the country’s rate of inflation was being triggered by parallel market forces highlighting that the Government needs to take austerity measures to contain the rate at which inflation was rising.

“Basically, I think you will be aware that the current situation where the parallel market has a very negative impact on the economy would naturally result in that rise in inflation.

“Essentially what we are looking at is a situation where there is great demand for the United States dollar but that is happening in a very irregular way.

“Consequently, what has happened is that it pushes inflation figures up,” an economist, Dr Davison Gomo, said.

“The other pressure is that if you are going to have some much money chasing too few goods in the market, whether this is a direct product of panic buying that pushes up inflation.”

He said macro-economic challenges facing the country at the moment would be addressed by the Transitional Stabilisation Programme that has been enunciated by Finance and Economic Development Minister Professor Mthuli Ncube.

Early this month, the Government launched a transitional stabilisation programme in a bid to set the economy on a recovery path after years of stagnation.

The economic stabilisation programme, which runs between now and December 2020, acknowledges policy reform initiatives of the new dispensation to stimulate domestic production, exports, rebuilding and transforming the economy to an upper middle income status by 2030.

The reform initiatives have been outlined in various policy pronouncements by President Emmerson Mnangagwa, from his inaugural address on November 24, 2017, as well as the 2018 National Budget Statement.

Another economic analyst, Ms Wendy Mpofu echoed similar sentiments as Dr Gomo adding that despite the obtaining situation on the ground, Zimbabwe’s annual rate of inflation will close the year below the Sadc average rate of seven percent.

“I think we can still end the year with the seven percent average rate for Sadc if drastic measures are taken very quickly so that at the end of the day we starve off this irregular behaviour on the part of the informal market,” she said.

An economic commentator, Mr Peter Mhaka said the Government also needs to highly prioritise the supply of fuel in the market to stabilise prices which in some instances have gone up by margins above 400 percent taking advantage of the parallel market foreign exchange rate that has gone haywire in the past few weeks.

“Given the upward spiral of the foreign exchange rate in the black market, the Government needs to be prudent enough in terms of fuel supply in the market.

“Otherwise, the nation will have to do another battle to douse inflation degenerating from the fuel factor,” he said.

Last week, the Government announced an injection of $41 million forex facility by the Reserve Bank of Zimbabwe for fuel, a move expected to result in a remarkable improvement in the supply of the precious liquid. — @okazunga

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