On suspending the publication of annual inflation numbers, Finance minister Mthuli Ncube had argued for statistical conventions on the need to have comparable indices in the same currency.
Zimbabwe also recorded a sharp increase the monthly inflation rate for February, according to an announcement from Zimstat on social media. The month on month inflation rate put on 11.29 percentage points to 13.52% from January’s 2.23%. CPI moved to 640.16 from 100 recorded a year earlier and a 76.26-point increase from the 563.90 recorded in January 2020.
Further analysis shows that the m-o-m inflation of 13.52% is almost in line with the average depreciation of the local currency on the parallel market of 12.04% from 17 January – 17 February 2020. If ZimStat is to be consistent with their data collection dates of between 12 and 17 of each month, March inflation will come in at higher levels as the local currency depreciated 17% early-March and prices started to adjust at the same time.
Ncube says that high inflation is one of the unintended consequences of the Transitional Stabilisation Programme and that while it is being driven by being driven by parallel exchange rate and money supply developments, additional inflationary pressures (which Government has no control over) were due to high inflation expectations. Government is targeting 50% annual inflation by year end.
Treasury and RBZ have roped in some measures to deal with the runaway parallel rate which includes the managed-floating exchange rate on the Reuters market marking system. Treasury even went further by suspending fungibility of dual listed shares as a measure to contain the parallel rate. In order to rein in inflation, the central bank will need to control reserve money and money supply growth and more importantly have increased forex on the interbank market, which would help in having a uniform exchange rate and would remove all pricing distortions.