A double-digit US$ inflation rate is cause for concern considering the economy is already highly dollarized, industry lobby group Confederation of Zimbabwe Industries (CZI) has said.
Zimbabwe is battling to maintain sustainable inflation rates with a series of measures being implemented time and again to achieve the goal.
Last year, the Reserve Bank of Zimbabwe (RBZ) introduced the ZWG currency – a minerals and foreign currency backed local unit and presented it as the lasting solution to decades-old currency problems.
Six months after its introduction, the ZWG suffered massive depreciation against the greenback on the alternative market. The central bank was forced to swallow the bitter pill after intervening by unilaterally declaring a 43% devaluation rate in a bid to align with realistic market trends.
However, inflationary rates published by the Zimbabwe National Statistics Agency (Zimstat) last month indicated that the country’s ‘safe-haven’, the US$ endured severe inflation blows after the year-on-year US$ inflation rate for January 2025 jumped to 14.6%, thereby gaining 12,1% from a rate of 2,5% in December 2024.
“Against the background, double-digit USD inflation under a highly dollarized environment is a cause for concern, as prices are generally expected to be stable in USD terms,” the industry grouping inflation tracker said.
Records show that US$ inflation rate has been stable since January 2021 with current trends departing from the year’s long gains.
“In Zimbabwe, US$ inflation is normally a response to ZWG inflation, as retailers adjust their prices in line with ZWG prices to avoid being accused by the RBZ’s Financial Intelligence Unit (FIU) for using the parallel market rates,” the CZI analysis said.
The US$ month-on-month inflation began the year at a higher rate of about 11,5% for January 2025, which is an all-time high rate over the past four years.
