Zimbabweans continue to sing the blues as the latest inflation figures show just how hard life is getting. Rising to another post-2009 dollarisation high of 765.57% year on year for the month of April. Gone are the promises by Finance Minister Professor Mthuli Ncube of low double-digit and single-digit inflation by the middle of the year. Analysts expected The year on year inflation come in at 760%. ZimStat had kept the nation waiting, citing Covid-19 lockdown related problems. This is a little strange as they usually claim to record figures during the 2nd or 3rd week of the month.
On a month on month basis inflation was expected to claim a post-2009 high of 42%. We will have to wait a little bit longer to get the information on the month on month inflation for April.
Two major factors pushing prices upward are the exchange rate and the COVID-19 pandemic induced lockdown which we were recently told will continue in level 2 for an indefinite period. On the parallel market, which still provides the widest access to much needed foreign currency the Zimbabwean dollar has given up close to 65% of its value this year. With fears of importation trouble and preparations for lockdown, prices rose sharply in Zimbabwe to further exacerbate inflationary trends. The Zimbabwean dollar has not faired well on the parallel market.
New notes
Zimbabwe recently announced new $10 (US$0.15 according to the parallel rate) and $20 (US$0.30) notes that will be added to the existing cash. With reports of some 600 tonnes of $10 notes having arrived in the country a fortnight ago and availed in the nation last week. The $20 notes will be introduced in the month of June. Zimbabweans have already braced for the additional inflationary pressure this will cause.
And Quantitative easing
The Finance Minister after much dodging finally clearly pronounced through his twitter account that some of the $18 billion stimulus packages recently announced will be done through quantitative easing. The irony of cash shortages and extreme money supply growth is a tough one to reconcile but is the reality of Zimbabwe.
Zimbabwe continues to battle with COVID-19 induced crisis in the middle of a pre-existing economic crisis. The inflationary pressure is not new but will certainly be impacted by the impact of COVID-19 and the lockdown. With many informal businesses still prohibited from operating the economy is taking a major toll. The Ministry of Finance and The Reserve bank of Zimbabwe have tried everything but what needs to be done to tackle inflation in Zimbabwe.
