Inflation gains marginally

Oliver Kazunga Senior Business Reporter
ZIMBABWE’S annual inflation rate for June gained 0.33 percentage points to – 1,37 percent, according to the Zimbabwe National Statistics Agency (Zimstat). The statistics agency said the month-on-month inflation rate for June was 0,19 percent gaining 0,43 percentage points on May 2016 rate of -0,12 percent. “The year-on-year inflation rate for the month of June 2016 as measured by the all items Consumer Price Index (CPI) stood at -1.37 percent, gaining 0.33 percentage points on the May 2016 rate of -1.69 percent.

“This means that prices as measured by the all items CPI decreased by an average of -1.37 percentage points between June 2015 and June 2016,”said Zimstat. The year-on-year food and non-alcoholic beverages inflation prone to transitory shocks stood at -4.04 percent while the non-food inflation rate was -0.09 percent.

Zimstat said month-on-month food and non-alcoholic beverages inflation rate stood at -0.35 percent in June 2016, gaining 0.14 percentage points on the May 2016 rate of -0.49 percent.

“The month on month non-food inflation rate stood at 0.44 percent, gaining 0.57 percentage points on the May 2016 rate of -0.12 percent,” it said. In an interview, an economist Mr Kipson Gundani said the trend shows that the rate of inflation had marginally moved from deflation due to revenue inflows coming through as a result of the tobacco marketing season.

“Since 2009, you would find out that during the months of May and June revenue from tobacco sales stimulates demand and because of the fact that we’re in a deflationary mode, spending power as a result of tobacco sales has slightly improved. This then shifts the country slightly from deflation,” he said.

He said Zimbabwe would continue in a deflation environment this year unless the macro-economic variables driving the country into deflation are addressed. The deflationary environment is due to low consumer spending owing to limited disposable income and low industrial capacity utilisation that has seen some companies offloading their workforce.

“At the moment, consumer spending is weak and even if bond notes are to be introduced, consumer spending power will be temporarily addressed. The bond notes are backed by a loan facility, which is a liability to the economy because we’re borrowing to improve liquidity,” Mr Gundani said.