Inflation figures for March 2019 are out and the trend is worrisome. Year on Year inflation is at 66.8% up from 59.39% recorded in February 2019. The Month on Month figure also increased from 1.67% in February 2019 to 4.68% in March 2019.
Food inflation is one of the key drivers of inflation, rising from 63.7% in February 2019 to 69.8% in March 2019. However, it is Month on Month inflation which is likely to give Finance and Economic Development Minister Mthuli Ncube sleepless nights. Last month, he indicated that Month on Month inflation is a more accurate reflection of what is happening on the ground and we should focus more on it and not on year on year figures. In February 2019, it had gone down to 1.67% after reaching 10.75% in January 2019. Now, it is going up again.
The latest inflation figures leave Zimbabwe with the highest Year on Year inflation in Africa. Sudan is second with 44.29%. In terms of world figures, we are the second highest. Only Venezuela with an inflation rate of 1 623 656% is worse off. North Korea and Argentina have inflation rates above 50% just like Zimbabwe.
Looking into the future, the exchange rate between the RTGS Dollar and the US Dollar keeps going up and this is likely to lead to price increases across many sectors of the economy. The interbank foreign currency exchange market which started off at a rate of 1:2.5 about a month ago is now around 1:3.11. The parallel market rate has already surpassed 1:4.5 and things look like they are not getting any better. Moreover, recent producer price increases for maize, cotton, soya bean and other crops are likely to also contribute to further inflation.
With the likelihood of prices increases looming, there is still a lot of work to be done before we see inflation going down.