Inflation Surges As Zimbabwe Dollar Loses Value
Zimbabwe’s inflation rate rose in January 2024 as a depreciating Zimbabwe dollar pushed up the prices of goods and services.
The Zimbabwe National Statistics Agency (ZIMSTAT) said the annual inflation rate for January rose to 34.8% from 26.5% in December 2023.
According to Business Times, the Zimbabwe dollar street rate on Wednesday, 31 January was between ZWL$16 000:US$1 and ZWL$17 000:US$1, up from ZWL$8 000 at the beginning of the month.
On the formal market such as the willing seller-willing buyer, the Zimbabwe dollar was trading at ZWL$10 152: US$1, up from about ZWL$5 900 at the start of January 2024.
According to ZIMSTAT, the Consumer Price Index (CPI) was 120.67 in January 2024, 113.22 in December 2023 and in January 2023 the index was 89.49. Between January 2023 and January 2024, the index rose by 31.18.
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The month-on-month food and non-alcoholic beverage inflation rate was 15.0% in January 2024, before gaining by 6.4 % points on the December 2023 rate of 8.4 %.
The January 2024 month-on-month non-food inflation rate was 2.5%, shedding 0.4% points on the December rate of 2.9%.
Economist Prosper Chitambara warned that this year’s inflation rate is likely going to continue to rise. He said:
It is going to increase maybe for the next few months in the short term, then in the medium and long term it is going to depend on what the agriculture sector or agriculture performance if we have good, a normal season then there will be lesser pressure on food prices but if the output is below normal that is going to put a lot of pressure on food prices.
He also said inflation undermines economic confidence and reduces economic competitiveness. Said Chitambara:
Inflation is an indirect tax on incomes so it affects businesses and consumers alike in that it causes an erosion of incomes, it also weakens confidence in the economy, it creates uncertainties and self-feeling expectations which then drive the inflation spiral.
So inflation is not good for the economy, it ultimately erodes our competitiveness as an economy.
Inflation is the rate of increase in prices over a given time. It results from general increases in the costs of the factors of production and/or from an excess of aggregate demand relative to aggregate supply.
More: Pindula News
