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Martin Kadzere and Conrad Mwanawashe—
Zimbabwe’s inflation rate for November gained 0,83 percent, but remained in the negative due to the continued fall of the rand against the US dollar and weak consumer demand. Year-on-year inflation rate as measured by the all items CPI stood at -2,46 percent, gaining 0,83 percentage points on the October 2015 rate of -3,29 percent, Zimstat said yesterday.

Economic analysts say the country’s inflation is likely to continue in the negative due to the appreciation of the US dollar and weak consumer demand.

“Inflation remains negative and is likely to continue to be so due to the appreciation of the US$ against the South African rand, tight liquidity conditions and weak consumer demand,” said Mr Gibson Chigumira, executive of Zimbabwe Economic Policy Analysis and Research Unit.

He said the appreciation of the US dollar against currencies of Zimbabwe’s main trading partners, especially the South African rand will remain a “major concern”. “Significant deflation potently has several negative effects on Zimbabwean economy because consumption and investment demand could weaken further,” he added.

The month on month inflation rate in November 2015 was 0,16 percent after gaining 0,45 percentage points on the October 2015 rate of -0,29 percent, said Zimstat. While the general global economy outlook indicates that United States is performing well, economist Dr Gift Mugano said the situation led to the appreciation of the US dollar against major international currencies, which includes the South African rand.

He said since Zimbabwe is a net importer with South Africa, the depreciation of the rand is reflected in the country’s inflation dynamics. On another hand, the use of the US dollar, whose main sources such as exports, foreign direct investments, diaspora remittances and foreign aid has in its own resulted in constrained demand because the sources are not effectively performing, said Dr Mugano.