Month on month inflation figures for Zimbabwe showed a slow down in the rate of inflation in the month of July according to ZimStats. The rate of inflation was reported at 21.04%, a marked decline from the previous months 39.26%. The nation has stopped reporting year on year inflation figures due to what Finance Minister Mthuli Ncube claimed were differences in the monetary space that could not be accounted for when calculating price changes between last year and this year. Year on year inflation publication will resume in February 2020.
Why are prices still rising?
One of the more frequent questions in reaction to the news has been why prices continue to rise when inflation is slowing down. To put it simply the slow down in month on month inflation means prices are increasing but at a slower rate. All along price inflation in the nation has been driven by exchange rate movements and the exchange rate depreciation has also significantly slowed down in the last month after a move to a more liberal exchange rate system.
There are still questions surrounding the wisdom of not reporting year on year inflation. With shortages of electricity, foreign currency and fuel dominating economic conversations and a situation so fire authorities are resorting to demand suppression tactics accurate information is ever more critical. While that debate rages on the citizen continues to feel the pinch of inflation in their pocket on a daily basis. The situation for the citizen is compounded by the fact that salaries, in general, have seen very small increments with employers favouring hardship or cost of living allowances.
Based on data from ZimStat the implied annual rate would be 208% up from 175.6% the previous month. This is based on all items CPI which came in at 208 points. Contrast this with the Steve Hanke measured inflation rate of 556%.
The battle with inflation is one the Ministry of Finance and the government of Zimbabwe are not winning. In the midst of continued inflation threats to the nations productivity cast a bleak future for Zimbabwe. The reliance on imports continues to place the nation at the mercy of exchange rates in a time of foreign currency shortages.