If there was a party when inflation was contained to just over 50% year on year the party is over. Sobering inflation statistics were published by ZimStat on the 26th of April showing that year on year inflation is now 96.4% compared to 72.7% in March 2022. Meanwhile, month on month inflation more than doubled to 15.5% compared to 6.31% the previous month. This is no surprise to regular readers as we noted the acceleration in inflation. It started marginal but it is clearly roaring again and there’s likely more to come.
Year on year
Year on year inflation rocketed to 96.4% year on year. In simple terms, this means that you are paying just under double what you paid for things this time last year. Alarming? Yes! Surprising? No! We have observed and noted the trend since October 2021 pointing out that inflation was showing a growth pattern that looks similar to exponential. The reasons behind this are clear, the auction has failed to contain the parallel market rate which closed in 2021 at around 220 Zimbabwean dollars for a US dollar and has ramped up to somewhere between 400 and 420 depending on the sources you consult.
Month on month
Those with good memories will recall Finance minister Professor Mthuli Ncube speaking at the height of inflation in 2019 saying we should focus on the month on month inflation rather than the year on year inflation. I doubt the honourable minister would say the same thing right now. Month on month inflation more than doubled to 15.5%. You’d have to look back 21 months to see a figure higher. Not a long time but it feels like an eternity in Zimbabwean economic terms. The contractionary monetary policy announced by the Reserve Bank of Zimbabwe’s Monetary Policy Committee has not brought about the desired results.
Year to date picture
Looking at the year so far the picture is not pretty. All indicators are negative. The table below shows the changes in inflation over the last 12 months. Except for January 2022, the increase has been gradual. For those wondering inflation in 2022 so far is 19.8% according to ZimStat. Contrast this with an approximate 100% change in the parallel market exchange rate which still dominates pricing.