Annual inflation rate up

Oliver Kazunga, Senior Business Reporter
THE country’s annual rate of inflation marginally gained 0.16 percentage points on the November rate to -0.93 percent, data from Zimbabwe National Statistics Agency (Zimstat) shows.

Month-on-month, the inflation rate in December was up 0.04 percentage points to 0.06 percent.

The shift to the positive side means that Zimbabwe is slowly moving out of deflation due to the South African rand which last month began to firm against the United States dollar.

“The year-on-year inflation rate for the month of December 2016 as measured by the all items Consumer Price Index (CPI) stood at -0.93 percent, gaining 0.16 percentage points on the November 2016 rate of -1.09 percent.

“This means that prices as measured by the all items CPI decreased by an average of -0.93 percentage points between December 2015 and December 2016,” said Zimstat.

A majority of Zimbabwe’s imports come from South Africa.

Throughout 2016, Zimbabwe experienced deflation as the rand continued to weaken against the United States dollar.

Since the adoption of a multicurrency system in February 2009, the country has been using a basket of currencies dominated by the United States dollar and the weakening value of the rand continued to make imports especially from South Africa, cheaper for local retailers.

An economist, Dr Gift Mugano said the shortage of the nostro balances was also contributing to making the country’s economy move away from deflation as local companies were constrained in securing cash to import raw materials.

The Reserve Bank of Zimbabwe (RBZ) Governor, Dr John Mangudya, has said they have put in place effective mechanisms to ensure all key sectors of the economy are given priorities in the allocation of forex to import raw materials, fuel and production of the much needed fertilisers to boost the economy.

Of late, there have been concerns from individuals and organisations that they are being starved of forex.

Dr Mangudya is on record as saying such individuals and organisations should bear in mind that foreign currency is scarce and only key sectors would be prioritised under the 30 percent which the RBZ allocates.

@okazunga