HARARE: Zimbabwe’s year on year inflation rate continued to rise in June and stood at 0.75% after gaining 0.27% on the May rate, latest data has shown. Zimbabwe slipped out of deflation in February after year-on-year inflation for that month stood at 0,06%, after gaining 0,71% on the January rate. In January, year-on-year inflation was -0,65%. The main drivers of inflation were bread and cereals, meat, vegetables, oils and fats. May’s month on month inflation rate also shed 0.02, to stand at 0.03%, compared to April’s 0.05%. “The month on month food and non-alcoholic beverages inflation rate stood at 0.07% in May 2017, gaining 0.43% on the April 2017 rate of -0.36%. The month on month non-food inflation rate stood at 0.01%, shedding 0.24% on the April 2017 rate of 0.25%,” said Zimstat.
Zimbabwe slipped into deflation in September 2014 when the inflation rate went below zero. Analysts also say inflationary pressures will continue to increase as Government is constantly running a budget deficit and hiding inflation in the Treasury Bills that have been issued unsustainably. In his 2017 Monetary Policy Statement, central bank governor John Mangudya said inflation was expected to move into positive territory in 2017 for the first time since September 2014, on the back of anticipated increase in international oil prices and domestic sector recovery. “There are strong indications that oil supply will fall on the global market, following the agreement by oil producing nations to cut production in 2017,” he said then. “This positive trajectory is expected to be reinforced by the general recovery of the economy in 2017 on account of the expected strong agricultural outturn, which is going to increase disposable income.” Mangudya said the bank was projecting inflation of around 1% to 2% in 2017.
Zimbabwe’s annual inflation rate averaged 0.86% from 2009 until 2017, reaching an all-time high of 5.30% in May of 2010 and a record low of -7.50% in December of 2009. Zimbabwe’s controversial bond notes are seen driving inflation into the future and have already been blamed for rising inflationary pressures at the end of 2016. The central bank introduced bond notes late last year, which it claimed was backed by a US$200 million Afreximbank facility, to ease the cash crisis that started ahead of the 2015 festive season.
