Zimbabwe’s Annual Inflation Rises by 3.5% in USD Terms

Spread the love

HARARE – Zimbabwe’s annual inflation increased by 3.5% in USD terms in May, according to the Zimbabwe National Statistics Agency (Zimstat), which has released its first set of data for the new ZiG currency.

According to NewZwire, Zimstat now provides three separate inflation figures: in USD, in ZiG, and a weighted average combining price changes in both USD and the local currency.

Year-on-year inflation in USD terms stood at 3.5% in May, while month-on-month inflation was 0.1%, a decrease of 0.7 percentage points from April. In ZiG terms, inflation was -2.4% for May 2024, reflecting price changes since ZiG was introduced in April. Annual ZiG inflation figures will be available next April, allowing for a year-on-year comparison.

The weighted month-on-month inflation rate, which accounts for price changes in both ZiG and USD, was -0.6% in May. Zimstat reported that the USD inflation in May was driven primarily by the cost of food and non-alcoholic beverages, followed by furniture and equipment. Transport costs were the biggest contributor to the weighted monthly inflation.

In May, the Food Poverty Line (FPL)—the cost of basic nutritional needs—was ZiG401.36. The Total Consumption Poverty Line (TCPL), the amount required to afford basic necessities and not be considered poor, was ZiG624.44.

Zimbabwe introduced the ZiG on April 5 to replace the Zimbabwe dollar, which had been severely devalued by inflation. The central bank has tightly controlled the circulation of ZiG to prevent further inflation, which has inadvertently increased the cost of some services that relied on the local currency for small transactions, such as transport.

According to the Reserve Bank of Zimbabwe (RBZ), over 80% of transactions in the economy are now conducted in USD. This shift is attributed to the market’s rejection of the Zimbabwe dollar and the RBZ’s strict control over the money supply, including maintaining high interest rates.