The inflation picture for Zimbabwe gave mixed signals for October 2020. Month on month inflation was up marginally from 3.83% in September to 4.37% in October breaking the downward trend. Year on year inflation decreased by almost 200 percentage points from 659.4% in September to 471.25% in October 2020.

Month on month

In previous months we observed the trend for the month on month inflation is two months down then two months as the graph illustrates. It seems the trend is still with us with the latest report from Zimstat. It is unclear whether this pattern is a result of a measurement issue or random but it seems to consistently hold. This increase will be of concern to the authorities who have otherwise had a very good report card of late. Managing to keep it single digit is a great achievement.

Year on year

The year on year picture painted the latest efforts in a better light as there was a slowing of inflation. Year on year inflation is back below 500% for the first time since January 2020. After peaking at 837.50% in July 2020 there seems to be some control being exercised on prices in Zimbabwe. With money supply growth contained both the parallel and official foreign currency markets have not seen much movement in October.

Not all Roses

Last months lowered inflation figures were disputed by civic organisations with evidence that prices were intact on the increase. Adding to the choruses that have long sung that Zimstat plays fast and loose when reporting inflation figures. The current inflation levels are consistent with Professor Steve Hanke’s purchasing power parity method which looks at inflation differently from the Consumer Price Index basket method.

Finance minister Professor Mthuli Ncube and the team will feel very proud of the work they have done in recent months. The reserve bank money supply update should add further depth to these results. What we have is a slowing down in the rate of increase in prices and not quite the lowering of prices we were promised.