After experiencing an absolute shocker the previous month, inflation in Zimbabwe has cooled down. This is a response to the efforts made by the Reserve Bank of Zimbabwe and the Ministry of Finance to alleviate inflationary pressures. Month on month, inflation was significantly negative at -15.3%, while year on year inflation massively retreated to 101.3% from nearly double that in June.

Year on Year

Zimbabwe year on year inflation July 2023

In June, the inflation levels were alarmingly high, nearly doubling the trend. This was an incredibly worrying situation for Zimbabweans, considering that the Consumer Price Index (CPI) is heavily weighted towards US dollars. Although the government had already initiated interventions, the economy repeatedly demanded more actions. Finally, the government committed again to reducing ‘quantitative easing’ by the RBZ and promoting the use of the Zimbabwean dollar for all government payments. As a result, the currency responded positively, leading to a reduction in year-on-year inflation from 175.8% to 101.3%. However, we should take this improvement with caution, as a year-on-year inflation rate of approximately 100% still means people are paying twice as much for things as they did the previous year.

Month on Month

Zimbabwe month on month inflation July 2023

Finance Minister Professor Mthuli instructed us to focus on month-on-month inflation, as it is most indicative of our situation. While these words were a curse last month, they are now seen as a blessing when analyzing the July inflation stats. The inflation rate dropped from a post-dollarization high of 74.5% to a negative 15.3%, which is a significant impact that the Minister will surely be happy about. The past few months have seen wild fluctuations in month-on-month inflation, and while some unpredictability may persist, there might be some respite in the next month due to the impending harmonized elections.

The multitude of measures implemented on the Zimbabwean economy has finally borne fruit, but the big question remains: how long will this stability last? Zimbabweans know all too well that while stability is possible, it has failed to hold for a meaningful duration in the past.