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Business Reporter
ZIMBABWE’S broad money supply, an indicator of inflation, declined 3 percent in June this year to US$3,84 billion from December 2012, data from the Ministry of Finance shows. Demand deposits also declined to US$1,98 billion from US$2,08 billion in December last year. Broad money is a measure of money supply that includes more than just physical money such as currency and coins (narrow money). It generally includes demand deposits at banks and any funds held in easily accessible accounts.
Over the last few months, particularly from December to the end of July, there was depressed business activity due to electioneering as households, businesses and investors developed a wait-and-see attitude prior to the July 31 harmonised elections.
Even the banks restrained from onward lending. Moreso, traditional international banks such as Barclays could not access offshore funds due to political hangover.
All these combined factors affected the circulation of money and its growth. This also explains why the liquidity problem worsened this year. The aggregate demand is expected to grow 7 percent this year, outgoing Finance Minister Tendai Biti said in July this year. It is down from the original forecast of 12 percent.
The year-on-year inflation rate for the month of July 2013 as measured by the all-items Consumer Price Index stood at 1,25 percent, shedding 0,62 percentage points on the June 2013 rate of 1,87 percent, ZimStats reported yesterday.
This means that prices as measured by the all-items CPI increased by an average of 1,25 percentage points between July 2012 and July 2013.
The year-on-year food and non-alcoholic beverages inflation prone to transitory shocks stood at 1,74 percent while non-food inflation stood at 1 percent. The month-on-month inflation rate was -0,38 percent, shedding 0,25 percentage points on the June figure of -0,13 percent.
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