Inflation to remain low, but . . .

remain in the 5 percent range for the upcoming year.
Analysts have generally agreed with the year-on-year inflation rate remaining low, but contend that this is not necessarily ideal. Senior economist with NKC Independent Economists (South Africa) Ms Christie Viljoen told Herald Business that although Zimbabwe’s annual rate of inflation will remain low next year, the accuracy of the statistics is questionable.
“The official inflation rate will remain low during 2013 due to the outdated structure of the consumer basket that is used to calculate inflation.
“It is quite possible that the country’s inflation rate is close to 7 percent year-on-year at present compared to a figure of 3,24 percent year-on-year reported for September,” she said. Questions have been raised over the country’s Consumer Price Index, which was rebased to a pegging of 100, reflecting the prices of goods that prevailed at the time of dollarisation. The major point of concern is that the decline in inflation in 2009 arose from the need to correct anomalies brought about by dollarisation, hence the current rate of inflation does not accurately reflect the prices of basic commodities on the shelves.
Common Market for Eastern and Southern Africa Business Council secretary-general Mr Trust Chikohora says depressed demand for goods will keep the inflation rate low.
“I think the minister’s target should be achievable given the prevailing figures of inflation at around 3,2 percent and the economic outlook going forward which is likely to continue to be characterised by liquidity constraints going into 2013,” he said.
Generally low aggregate demand in addition to tight liquidity and relatively limited capital inflows have served to subdue overall pressure on domestic prices in the economy.
Economist Mr Joseph Mverecha anticipates a prolonged depreciation of the South African currency.
As South Africa is Zimbabwe’s major source of imports, a relatively weaker South African rand against the American dollar helps to contain imported inflation.