Biti upbeat as inflation tumbles

firmly under control.
It had threatened to gallop in January when it peaked at 3,5 percent.
Annual inflation ended at 3,2 percent last year. But it increased to 3,5 percent in January, before decelerating to 3 percent and 2,7 percent in February and March 2011, respectively.
Similarly, monthly inflation has also been going down from 0,9 percent in January to 0,5 percent and 0,8 percent in the last two months.
Inflation refers to the rate at which prices of goods and services increase over a measured timescale, usually over a month or one year.
“The year-on-year inflation target of 4,5 percent is achievable,” the minister said on Tuesday in his comments over the first quarter economic performance review.
Minister Biti pointed out that the country now had the lowest annual rate of inflation in the Sadc region.
These developments have been attributed to the increased agricultural and industrial productivity, strong economic management and policy consistency and predictability.
But fears abound that the behaviour of some business-es continue to engage in activities that might fuel inflation.
There is also concern in Government of the risk of imported inflation due to the upheavals in the Middle East.
Disturbances in major oil-producing countries, including Libya, which produces 2 percent of the world’s oil, saw prices of crude oil rising from US$93 per barrel in January to US$108 in March.
“Zimbabwe being a net importer, particularly from South Africa, is bound to be affected by exchange rate volatility between the US dollar and the South African rand,” Minister Biti said.
The rand has been appreciating since January, obviously putting pressure on domestic prices, as more dollars will be needed to import similar quantities of goods from South Africa.
Government said while it had no control over external factors affecting oil prices, there was need to remain cautious to make appropriate fiscal interventions to minimise pressure on inflation.
Zimbabweans have vivid memories of the effect of inflation, which peaked at 231 million in July 2008. Hyperinflation caused Zimbabwe to scrap its local currency in favour of the multi-currency system, largely dominated by the US dollar.
Zimbabwe will continue to use the multi-currency system at least until 2012, or until it achieves reasonable macro-economic stability.