
HARARE – Zimbabwe’s economy continues to face significant challenges as both the Zimbabwe Gold (ZWG) and the US dollar succumbed to mounting inflationary pressures in January 2025, reflecting persistent economic instability.
According to data released on Tuesday by the Zimbabwe National Statistics Agency (Zimstat), the weighted month-on-month inflation rate surged to 11.5% in January, marking a sharp increase of 10.5 percentage points from December’s rate of 1.1%.
“The US dollar month-on-month inflation rate stood at 11.5% in January 2025, up by 10.9 percentage points from the December 2024 rate of 0.6%. Similarly, the ZWG month-on-month inflation rate rose to 10.5% in January, gaining 6.8 percentage points from December’s 3.7%,” Zimstat reported.
The agency also highlighted that the year-on-year inflation rate, as measured by the all-items USD Consumer Price Index (CPI), reached 14.6% in January 2025.
For the month, the rise in inflation was largely driven by increases in food and non-alcoholic beverages, which contributed 4.7% to the overall index. Housing, water, electricity, gas, and other fuels followed closely, accounting for a 3.9% increase.
Economic analysts attribute the inflationary surge to exchange rate volatility, which has prompted formal retailers to adjust US dollar prices to align with a formal exchange rate that lags behind the widely used parallel market rate. Currently, the official exchange rate stands at US$1:ZWG26, while the parallel market rate is significantly higher at approximately US$1:ZWG38.
Compounding the issue, formal retailers often peg their prices above the prevailing parallel market rate to mitigate risks associated with currency fluctuations and economic uncertainties.
Despite the challenging economic landscape, Zimstat suggested that increased government spending could have a positive impact by injecting more money into various development projects, potentially stimulating economic growth in the coming months.