The inflation trend we have become accustomed to continues to edge dangerously towards hyperinflation. For July 2022 ZimStat confirmed the misery that Zimbabweans are experiencing in their wallets and purses with year-on-year inflation coming in at 256.9%. Month on month gave little relief declining from 30.7% in June to 25.6% in July. While many measures have been put in place the results have thus far not been forthcoming on the ground.
Year on Year inflation
July’s 256.9% marks the highest year-on-year inflation figure since March 2021 (240.55%) when inflation was decelerating in Zimbabwe. The lowest recent inflation figures experienced in August 2021 now feel like “the good old days”. The pressures on prices are many in the nation. While global inflation is expected to almost double the normal thanks to the strain that energy and food prices have taken courtesy of the conflict between Russia and Ukraine. A 7.4% increase in general world prices is quite something to swallow. Zimbabwe has its share of problems with its currency to add to this. The currency has performed very poorly on all fronts shedding 75% of its value on the official market which many still feel overvalues the currency.
Global inflation rates year on year. Source Statista.com
Month on Month
Month on month inflation thankfully slowed down after recording a big month in June. 25.6% is preferred to the previous month’s 30.7%. The general trend remains upward and at a seemingly steady rate. Some of the effects of policies, the less desirable ones, are starting to be felt in the economy such as low Zimbabwean dollar liquidity in the market. Whether this will ultimately deliver the desired results by halting the currency’s depreciation on the parallel market remains to be seen. Although one of the measures instituted to prop up the second coming of the Zimbabwean dollar in its ailing state was to make the new interbank rate (willing buyer willing seller) the only legal rate for pricing we have once again seen the reverse foreign currency pricing that makes things even more expensive in foreign currency. In this practice, businesses inflate Zimbabwean dollar prices such that US dollar prices at the official rate become expensive.
The recently announced supplementary budget sought to double the expenditure targets also thanks to inflation. Civil servants recently received salary increments to keep up with the cost of living. While corners of government have made it clear that more measures may be instituted to continue what we are currently experiencing. The government is in between a rock and a hard place when it comes to managing the exchange rate as a cause of price inflation. Zimbabweans will continue to battle against the conditions.