ZimStat has published the month on month inflation data for January 2020 and the year starts with a bit of a surprise as the inflation rate recorded 2.2% price growth versus the 16.55% for the previous month December 2019. The year on year inflation rate continues to show no respite as it jumped 12.27% from 551.63% in December 2019 to 563.90% based on the Consumer Price Index. The prices were recorded between the 13th and the 17th of the month as we have become accustomed to.
The minimal price movement can be expected as the festive month of December coupled with the month of January represented some very quiet months on almost all markets in Zimbabwe. Most importantly the parallel market for foreign currency which has the greatest impact on prices in Zimbabwe. The parallel market exchange rate dropped from 23.6 at the beginning of December 2019 to close the year at 22.7. Only recovering to 23.7 a week into the new year and since that recovery pushing towards 30 lately. The month of January also is characterised by limited incomes and pricing would’ve largely reflected this.
Food and non-alcoholic beverage inflation rate was recorded at 2.55% compared to 15.75% the previous month. The non-food inflation rate for the month of January 2020 was 1.99% versus 17.14% in December 2019. The average inflation rate over the last 12 months was 17%.
In 2019 the government decided to stop publishing annual inflation figures. The reasoning given was that due to changing of the CPI base month from 2009 to February 2019 when the local currency was fully reintroduced, the year on year inflation would be based on an annualised interpolation of figures. They did say they would resume the publication of year on year inflation in March 2020 (February figures). We are finally there. Notably, the inflation picture has not improved so it will be interesting to see how committed they are to honouring that pledge.
ZimStat in the meanwhile seems to have sprung into life and this bodes well for those expecting the publication of year on year figures as we were promised. The entity has been very quiet, not unusual of government institutions though you would think they would be hardest at work in the current situation. The Reserve Bank of Zimbabwe only woke up out of its digital slumber when rumours of a freeing of the exchange rate gathered momentum.
The slower month on month inflation is a temporary relief if it can be called that at all. A 2.2% jump in prices without a commensurate jump in income is a very hard hit to take. While civil servants recent received a pay increase as others received cost of living adjustments it is fair to say those are making up for the past and not dealing with current inflation.
