When Finance Minister Professor Mthuli said that the target for year on year inflation in Zimbabwe was 55% by July 2021 and below double digits, by year-end, it was hard to believe and that was speaking modestly. The fundamentals at the time were not in shape for such an ambitious target. This was expecting inflation to drop from 837.7% to 55% in 12 months. Well, ZimStat has delivered what will surely be viewed as good news by the minister as Zimbabwe’s year on year inflation for July 2021 was announced at 56.37%. Given where we are coming from I think nobody would begrudge the minister over a 1.37% variance. Meanwhile, month on month inflation slowed to 2.56%.

Year on year inflation drops to 56.37%

That year on year graph looks good, doesn’t it? It hasn’t been completely smooth sailing. On the way down bumps were experienced but overall the job has been done. The difference is not just academic of course but felt in the pockets of Zimbabweans. Prices are still increasing, make no mistake about that. However, the rate of price increase has certainly slowed down drastically. Another way of looking at is that since the start of the year prices have increased 20.69% according to CPI inflation. In the same period, last year prices had increased 255.35%. A ten-fold difference.

Month on Month breaks the run to drop to 2.56%

Month on month inflation has continued its regular trend of bobbing up and down. This month it registered a decline to 2.56% after 2 months of increase to 2.54% (from 1.58%) and 3.9%. At current levels, month on month inflation does not support our next target which is single digit (less than 10%) year on year inflation. We would require month on month inflation to consistently be around 0.83% per month. That said we are a lot closer to it than we have ever been.


The talk of stability is inevitable when you get figures like this. On one hand price increases of 20.69% over 7 months, a year is very high but when compared to a 255% price increase it is certainly something to smile at. It has been achieved through magic or simply thinking about it. A lot of recognition goes to the leadership at the Reserve bank of Zimbabwe who put a lid on the money supply growth that plagued the nation between 2018 and 2020. The money supply is certainly still growing, 29.58% according to Reserve Money as published by the RBZ in their latest reserve money update. That’s for the year so far. This is in the presence of the new $50 note.

With a fiscal policy update expected this week, it will be interesting to see what new measures if any are applied to the economy. Understandably issues around Covid 19 are expected to be the focus as the 3rd wave of the pandemic is hitting Zimbabwe harder than the first two.