Month on month inflation slowed marginally to 17.70% for the month of September, this is according to ZimStats. This ever so slight decline from 19% for the month of August will represent little to celebrate for Zimbabweans. The lag in inflation data means this figure does not account price changes experienced since the major exchange rate events that occurred since.
Food and non-alcoholic beverage inflation once again lead the charge with a 19.55%increment month on month, up 1% from the previous month. Non-food inflation meanwhile dropped by a little over 1% to 16.63 % month on month. The overall consumer price index stood at 290.39%. The consumer price index base, the month the Zimbabwean dollar was allowed to trade, as the base month. We can, therefore, approximate an annualised inflation rate of 326%. The government has, of course, shied away from publishing year on year inflation data.
Prices have continued to show a strong correlation with the exchange rate. Although imports have declined we still rely heavily on imports. With critical input factor prices such as fuel and electricity being indexed to US dollar values and being calculated frequently even local producers have to track the exchange rate. The inability of the local currency to store value also leaves the US dollar as the viable storage mechanism.
The decline in inflation doesn’t give us much to celebrate. Firstly prices are still rising. Secondly, the graph clearly shows that the rate of inflation slowing is diminishing and we are likely to see a return to a climb in the month on month inflation as early as October, which will only be published in November. Meanwhile, the year on year inflation shows no signs of abating at all as it continues its upward trajectory. With the recent announcements by ZESA that they will join ZERA in regularly updating prices in reference to foreign currency exchange rate things can only get worse. The weekly ZERA fuel price update is now waited for on Sunday and soon after prices are adjusted accordingly. Soon we may see the same process happening monthly with electricity tariffs. All this while the exchange rate itself already affects prices.