Hyperinflation is back into the conversation among Zimbabwean consumers like it never left. Broadly speaking, inflation is when prices rise and the money in consumer pockets does not stretch as far as it used to.
By Kudzanai Sharara
According to Zimstat, annual inflation for the month of June 2022 stood at 191,6 percent, the highest it has been since April 2021 when it stood at 194,1 percent. It’s a 14-month high!
The June month-on-month inflation stood at 30,7 percent, the second-highest since July 2021 when it stood at 35,5 percent.
Worryingly, inflation has been on an upward trajectory since August 2021 when it stood at 50,2 percent. It does not seem to be slowing unless the latest measures by fiscal and monetary policy are effective enough.
The central bank put up the Bank Policy Rate at 200 percent, and banks are not allowed to charge anything below, with a few exemptions including SMEs and individuals.
Why do we have high inflation?
Authorities have attributed high inflation levels to rising international commodity prices, mineral prices, increasing food prices, and energy prices as well as domestic factors.
The Ukraine and Russia conflict has resulted in supply disruptions, particularly for commodities where Ukraine and Russia are major exporters.
These developments have added to broad-based imported inflation in an economy already suffering from the effects of a poor rainy season.
The sustained widening in the gap between the official and the parallel market rate continued to have an impact on inflation developments in the economy, the Ministry of Finance and Economic Development noted in its 2022 First Quarter Treasury Bulletin.
Domestic factors have also contributed, strongly, to the inflation spiral.
Authorities have blamed indiscipline, speculation, greed, and manipulation for the price hikes. Another reason inflation is going up, that Authorities often deny, is that government is spending a lot of money to fund infrastructure projects, agriculture programmes and subsidies of many things from foreign currency to public transport.
Who is feeling the pinch the most?
It’s given, that inflation is now a big problem. But who is it hurting the most?
By province, those in Manicaland felt it the most in the last two months. In June inflation in the province stood at 227,2 percent, the highest across provinces, and above the annual inflation figure of 191,6 percent.
Masvingo and Harare are second and third, with annual inflation at 207,1 percent and 203,8 percent respectively.
Those in Midlands are having it easy, at least in comparison, with annual inflation for June at 146,2 percent, the lowest across provinces.
Matabeleland North and Matabeleland South are second and third from last, with annual inflation at 162,2 and 170,3 percent respectively.
What kind of inflation are consumers feeling right now?
Consumers that use oils and fats are feeling the most pain at the till. Inflation for such products stood at 308,4 percent in June. The conflict in Ukraine — which supplies nearly half of the world’s sunflower oil, on top of the 25 percent from Russia — has interrupted shipments and sent cooking oil prices spiralling.
Before that, global cooking oil prices had been rising since the COVID-19 pandemic began for multiple reasons, from poor harvests in South America to virus-related labor shortages and steadily increasing demand from the biofuel industry.
Bread and cereals have also hurt the most with inflation at 274.1 percent, the second-highest. This month the Reserve Bank of Zimbabwe had to intervene, to keep bread prices low.
Electricity, with annual inflation of 260,2 percent, and month-on-month inflation of 218,1 percent, has the fourth-highest inflation.
Zimbabwe Electricity Transmission and Distribution Company (ZETDC) last month approved a tariff adjustment in order to restore the value of the tariff to a level of 10,63 US cents/kWh. – Business Weekly
