HARARE – Zimbabwe’s inflation last month spiked to its highest levels since 2010 as a shortage of foreign exchange curbed supplies of basic commodities, including wheat.
Zimbabwe National Statistics (Zimstats) said yesterday that inflation rose to 5.39 percent as prices remained elevated and investors marked down their net value positions.
Experts said the rising inflation was an indication that President Emmerson Mnangagwa was battling to turn the economy around.
They said the spike was occasioned by excessive printing of bond notes to counter the effects of currency shortages.
Total has told its pre-paid clients that it would not be able to guarantee the availability of petrol and diesel as a result of the prevailing foreign currency situation in the country.
“Due to circumstances beyond our control we are currently unable to guarantee availability of fuel. Stations might from time to time limit refuelling amounts depending on availability,” the company’s Esther Verenga said.
On Sunday, Mnangagwa warned parallel market currency dealers, describing them as a national security threat that warrants drastic measures.
He said the country should brace itself for further hardships as it tried to turn its economic fortunes around.
“We must all gird for belt-tightening measures, leaders and ordinary citizens alike. No one is immune to the sacrifices that are necessary to stabilise the economy,” he said.
The currency shortages have left retailers such as KFC closing shop, as they could not afford to buy stock.
Investors have also started to mark down their asset values.
“The majority of foreign institutional investors in Zimbabwe equities have already heavily marked down the net asset value of their positions and do not market on the basis of current share prices,” said Hasnain Malik, Exotix Capital’s equity strategist and research specialist on Zimbabwe.
Malik adds that for foreign investors that were “considering fresh investment, the cash scarcity premium now built into equities will surely need to reduce before valuations become attractive again”.
Last week, Reuters reported that the foreign currency shortages had hit the surrogate bond notes and driven prices upwards to send a ripple of fear through the economy.
The stock market, however, rose and the main index hit a record 699.89 points last Thursday, extending weekly gains by nearly 18 percent, official data showed.
“We are seeing investors shifting to stocks to protect their money,” said an analyst with a local asset manager, who was not authorised to speak publicly.”