It’s fair to say that many people don’t people place faith in the figures produced by ZimStats and the Reserve Bank of Zimbabwe when it comes to inflation reporting. We have many conflicting inflation figures already but there’s real disbelief at that recently published 17.70% month on month inflation for the month of September and rightly so.
According to ZimStats, the data used for the latest inflation report were collected between the 11th and the 17th of September and not the 30th of September. That means in addition to the usual 15-day lag there is an additional 13-day lag meaning the prices are a month old and not the usual 15 days. So the data is not as fresh as possible and may not reflect everything.
There’s more to it than that though. The period chosen conveniently falls just before the exchange rate insanity that prevailed in the latter part of September. Pricing of items in Zimbabwe is largely based on the exchange rate as many goods are important or business people seek to keep up with the cost of foreign currency.
As the graph shows the exchange rate peaked on the 20th of September at 21.5 (unconfirmed reports say it went as high as 23). Because pricing is done.using these rates many prices were hiked and though rates eased after a few government interventions prices didn’t do the same. Unfortunately, ZimStat did not give reasons for using that period of 11 to 17 September and no apparent reason can be assumed.
The 17.70% month on month inflation represents a minor slow down from 18.07 the previous month so perhaps there is motivation to use the period that doesn’t include the massive price increments that Zimbabweans suffered. Exchange rate movement which is the cause for much of price increment 35% on the parallel market (29% on the interbank market) in September and 14% in August on both markets. Based on this alone we would expect month on month inflation to be higher in September than August. Bearing in mind that ZERA reviews fuel prices every week and there are two weekends of increases in the critical inputs price that are not included in what has been presented as August inflation.
No love will be lost between Zimbabweans and ZimStat over this as the government already shot itself in the foot by putting a hold on the publication of year on year inflation figures. This will just be the latest addition to their efforts to paint a situation away.