Inflation dips marginally

year, the Zimbabwe National Statistical Agency said yesterday.
But at 3,24 percent, the annual rate of inflation remains well within the 5 percent range the Finance Ministry forecast for the year to December 2012.
The year-on-year inflation rate is given by the percentage change in the index of the relevant month of the current year, compared with the index of the same month in the previous year.
The year-on-year food and non-alcoholic beverages inflation stood at 4,80 percent while non-food inflation stood at 2,55 percent.
The month-on-month inflation rate in September 2012 was 0,46 percent, gaining 0,64 percentage points on the August 2012 rate of -0,18 percent.
Inflation denotes the rate at which prices change at a given period. A decline in the rate of inflation does not necessarily mean a drop in prices.
The drop, although marginal, means the dominant currency — the US dollar — is losing value in an economy where salaries are static.
But Zimbabwe seems to be paying the price for over-reliance on imports from its southern neighbour, South Africa, while exports remain low.
Zimbabwe imported US$1,2 billion worth of goods in the period January to July this year while exports totalled US$195 million.
Against this background, Zimbabwe experienced a trade deficit of US$976 million with South Africa over the period under review.
Zimbabwe now ranks as the third largest consumer of South African produce on the continent after Zambia and Mozambique.
It is also the fifth largest exporter of goods to Africa’s biggest economy after Nigeria, Angola, Mozambique and Zambia. Zimbabwe imports up to 60 percent of the basic foodstuffs it consumes from South Africa due to the limited capacity of local industry.
Most local companies are unable to compete against foreign producers due to old and obsolete equipment.
According to Industry and Commerce Minister Professor Welshman Ncube, the local industry requires about US$2 billion for recapitalisation. 
Zimbabwean companies have not been able to recapitalise and regenerate the industrial base due to a decade of economic instability that decimated about half the country’s Gross Domestic Product.