The Month-on-month inflation figures for the month of October provided little relief for Zimbabweans as inflation marginally slowed by 0.37%.  This, however, means there was an increase in prices by 17.7% (versus 18.07% the previous month) and this is reflected more in the experiences of Zimbabweans. Year on Year on data, though not announced by the government until February 2020 showed a continued escalation in inflation at 353%. The month on month figure was the lowest since May 2019 while the year on year figure was the highest since 2009.

The graph shows that the decline in inflation rate month on month is coming to a grinding halt and perhaps an upward tick if the fundamentals behind the inflationary pressures do not change soon. Transport was one of the few sectors that registered a decline month on month, 16.8% in October versus 32.6% in September. Food and non-alcoholic beverages recorded a 19.5% increase versus 18.6% in the previous month. Housing and utilities inflated nearly 2% faster recording 15.5% in October. This was largely attributed to ZESA also implementing regular tariff hikes. Clothing and footwear revealed a sharp increase from September’s 10.8% to Octobers 17.5% while recreation and culture showed similar increment from 12.7% to 18%. Furnishings inflated faster as well pushing up 14.7% in October in contrast to the 11.2% in September. Miscellaneous goods and services in the basket just about doubled the rate of price increase, 35% in October versus 18.8% in September.

If everything is up why is inflation down?

If you read the above paragraph carefully then you should be asking yourself if everything inflated faster in October than September then why is Octobers inflation lower than September? There are two probable reasons for this and it likely a mix of both. The first factor being that inflation is calculated on a basket of goods and that basket is weighted. So all items in the Consumer Price Index basket are not there in equal measure. So increases in low weight items will not mean as much as decreases in high weight items. We live in times where bread has been declared a luxury. The second reason being that September’s inflation figures did not include the entirety of the month, particular that part where exchange rates shot up highs of 21% on the parallel market. A figure that we are seeing now in the market.

Meanwhile, the year on year inflation was implied from the month on month as 353%. As the graph shows the year on year inflation figures show no sign of slowing down at all. The annual inflation rate was largely pushed by food inflation which stood at 480% year on year. The irony of all this is that this was the month Finance Minister Professor Mthuli Ncube told us that we would start to see prices declining. Of course, the effects of a low rainfall season and cyclone Idai on agriculture were not foreseeable.

The inflation picture for Zimbabwe is quite worrying whichever way you look at it. With new notes and coins coming in there is a palpable concern, despite assurances, that this will add more inflationary pressure. We have experienced money supply growth at a time they were not printing money, if all else is held equal we can only expect the introduction of the new physical money to influence the inflation rate. Even if we take away any suspicion of sinister activity by the authorities, the introduction of liquidity only represents an easier flow of money. That too is inflationary.