ZIMBABWE’s annual inflation rose 0,49 percentage points to 3,46 percent in December 2017, from the November 2017 rate of 2,97 percent, latest data from the Zimbabwe National Statistics Agency (ZIMSTAT) shows. According to the Zimstat report, this means that prices of goods and services, as measured by the all items Consumer Price Index, increased by an average of 3,46 percent between December 2016 and December 2017.
Despite the recent increase in the price of some items, annual average inflation closed the year at between 3 percent and 5 percent, in line with the Reserve Bank of Zimbabwe (RBZ)’s 2017 year end inflation projections. The month on month rate of inflation for December 2017 shed 0,21 percentage points to close at 0,53 percent from 0,74 percent in November 2017.
“This means that prices as measured by the all items CPI increased at an average rate of 0,53 percent from November 2017 to December 2017,” said Zimstat. The year on year food and non-alcoholic beverages inflation prone to transitory shocks stood at 6,6 percent whilst the non-food inflation rate was 2 percent.
Month on month, food and non-alcoholic beverages inflation rate shed 0,45 percentage points on the November 2017 rate of 1,74 percent to 1,29 percent in December 2017. The month on month food inflation rate came in at 0,16 percent, shedding 0,1 percentage points on the November 2017 rate of 1,26 percent.
Zimbabwe’s CPI basket shows that about 70 percent of the CPI basket are necessities such as food and non-alcoholic beverages, housing, water, electricity, gas and other fuels, health, transport and communication. Food and beverages constitute 33 percent of the CPI basket. Most items are produced locally or imported with priority allocations.
Prices for 495 products in the CPI are observed every month in all the districts throughout the country. About 35 000 individual price observations are made every month in all the districts for these 495 products.
The prices of these products have been fairly stable since 2012, if not declining, but seemed to rise wantonly between September 21 to 23, 2017. “The rate of inflation in Zimbabwe is currently below 10 percent meaning that Zimbabwe is not in hyperinflation,” Zimstat said in its report. The central bank said the irrational price increases noted in November and in December were motivated by opportunistic and profiteering tendencies not supported by fundamentals.
“ZIMSTAT’s inflation calculation is detailed and meets international standards. By the same token, it is clear that most inflation estimates by independent analysts are guesstimates designed for other purposes, which are outside international best practice,” the RBZ said.
Some analysts are using model based estimation techniques such as the Purchasing Power Parity theory (PPP) and the Old Mutual Implied Exchange rate for Zimbabwe to estimate Zimbabwe’s inflation rate, consequently coming up with inaccurate inflation figures, the central bank said.
In the outlook period, overall inflation is expected to remain mild. On its part, the RBZ has increased foreign currency allocation for the import of fuel, electricity and raw materials used in the production of cooking oil, with a view to dampen inflationary pressures in the economy.