There’s always been a sense of inevitability when it comes to Zimbabwe’s inflation reporting bringing bad news. Finance Minister Professor Mthuli Ncube told the nation that inflation would trend downwards in 2020. Well, the inflation statistics for March 2020 couldn’t be further from that assertion than they are with month on month inflation coming in at 26.59%. The year on year inflation figure which the nation only resumed reporting on in February came in at 676.39%, the highest it’s been since 2009.

On a month on month basis the inflation rate doubled as compared to the previous months 13.52%. The biggest factor in the rate of increase is the exchange which had been relaxed from the official held 17-18 and jumped drastically to 24 in a single day, reaching a high of 26.11 before being fixed again at 25 in the wake of the COVID-19 pandemic. The parallel market exchange rate rallied heavily in March from 30.8 to a high of 45. With jumps of 40% and 50% in the official and parallel market exchange rates, upward pressure on inflation was to be expected.

The Zimbabwean Consumer price index basket used by Zimstat in determining price levels is weighted as shown in the image below. Please note that the figures have been derived from Zimstat documents and the percentages add up to 100.10%as per the source documents. None the less it does a good job of showing us how they go about their work. By looking at the categories you can see there is a mix of items affected solely by the parallel market rate, items affected by both the official & parallel and items affected by neither.

With the nation having gone into lockdown in the wake of the COVID-19 global pandemic prices sharply increased amid panic buying giving the countries sensitivity to imports for goods. The future is not likely to look good on the inflationary front. With many businesses closed for lockdown, there has been little parallel market activity but that has not stopped the Zimbabwean dollar from reaching a new low on the parallel market nearing the 1:50 to the US dollar mark