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Oliver Kazunga Acting Business Editor
ZIMBABWE has not yet moved away from deflation despite the rate of inflation in January having increased by 0,08 percentage points to 0,41 from the December rate of 0,33 percent, economic commentators said yesterday. Data released by the Zimbabwe National Statistics Agency (ZimStat) last week showed that the country’s consumer inflation quickened to 0,41 percent year-on-year in January from 0,33 percent in December after an increase in the prices of food and non-alcoholic beverages.
ZimStat said on a month-on-month basis, prices rose by 0,14 percentage points in January after easing 0,08 percentage points the previous month.
An economic commentator Trust Chikohora said: “Despite inflation quickening to 0,41 percent year-on-year in January from 0,33 percent the previous month points out that the country is now moving away from deflation. Fears still remain that the country may record deflation because our rate of inflation is still close to zero and the economy is still stagnant owing to low liquidity on the market.”
Deflation refers to a decrease in the general price level of goods and services and it occurs when the inflation rate falls below zero percent.
Chikohora said if the country starts recording inflation figures with whole number percentage points, it might be an indication that Zimbabwe is moving away from deflation.
Another economic commentator Wendy Mpofu echoed similar sentiments adding that Zimbabwe should maintain single digit inflation.
“For us to be on the safe side, our inflation rate should be a single digit hovering around five percent. That rate of inflation should also reflect the economic principles on the ground. For example, although since 2009 when the economy was liberalised, the country has maintained a single digit inflation not exceeding five percent, it was not in tandem with economic principles in the country especially in 2012 when the economy started registering stagnation,” she said.
An economic commentator Peter Mhaka added his voice saying the country was still in a precarious position with regards to deflation.
“What is critical at the moment is for us to address the challenges of liquidity in the economy as well as addressing the gap between imports and exports. As long as the liquidity situation does not improve on the market and we continue to have more imports than exports, the country still remains at risk of registering deflation considering that the latest figures released by the ZimStat continue to show that inflation rate is still close to zero,” he said.
Recently, Zimbabwe’s inflation figures have been on a downward trend amid fears that the country could soon be plunged into deflation considering that the economy was still stagnant.
Deflation is not good for the economy as it entails that the economy at that stage will not be registering any growth and companies will be scaling down operations as well as reducing working hours as there will be no economic activity.
Online Reporter