Finance and Economic Development Minister Mthuli Ncube has defended his decision to blackout publication of year-on-year inflation statistics for the next six months, saying continuing to do so does not make sense theoretically and statistically, but retaining month on month figures.
Last week, in his 2019 Mid-Term Budget Review Statement, Minister Ncube said deferring publication of inflation figures “will ensure that we compare like with like in terms of currency regimes.”
“Given this transition, Zimstat will defer publication of year-on-year inflation while building up data of prices in mono-currency for a period of 12 months to February 2020. Year-on-year inflation publication will therefore resume after February 2020, alongside with month-on-month inflation publication,” said Minister Ncube.
Speaking at a Mid-Term 2019 Budget Review breakfast meeting, Minister Ncube argued that prices had not gone up in US dollar terms.
He gave an example of Mazoe, which he said was still within the US$3 range from last year using the current exchange rate.
He said the CPI indexes must be able to compare like for like.
“That’s why I recommended that because of this confusion, let’s do what we did in 2009 when we moved into the multi-currency system from the Zim dollar system. Let’s suspend the calculation of year-on-year inflation.
“It’s not making sense theoretically and statistically. Let’s focus on month-on-month inflation because month-on-month inflation is correct. Keep going with that until February 2020. Then we will do things properly,” he said.
Zimbabwe’s month-on-month inflation rate for June jumped to 39,26 percent, after gaining 26,72 percentage points on the May 2019 rate of 12,54 percent and Prof Ncube agreed that the figure is too high and double what it was last year on average.
However, market analysts queried the suspension of publishing year-on-year inflation figures.
Confederation of Zimbabwe Industries (CZI) economist Tafadzwa Bandama, said the suspension of inflationary data “creates a void in the economy” which speculators and other players will feed into. “Somebody else is going to occupy that space.”
She said the absence of official inflation figures “will become fodder for speculators who will run on the exchange rate” as economic agents will follow such statistics.
Already American-based Professor Steve Hanke, is boasting of being the source of Zimbabwe’s year-on-year statistics.
“I have been the only source of the accurate inflation rate for Zimbabwe. Now, since (Minister) Mthuli Ncube announced that the Government will stop publishing inflation information, I am the only source for Zim’s inflation rate,” Prof Hanke tweeted on his Twitter handle.
Prof Ncube, however, dismissed Pro Hanke’s inflation model as a proxy for actual inflation in Zimbabwe due to the distortions that come with it.
He said using the pricing of an equity instrument such as Old Mutual does not reflect the true picture on the ground in terms of prices.
Minister Ncube also challenged The Zimbabwe Economics Society, which was represented at the meeting by Dr Nigel Chanakira, Dr Godfrey Kanyenze, and Dr Clever Mumbengegwi among others, to come up with their measure of inflation which is locally relevant.