RBZ: Why The ZiG Inflation Surge Doesn’t Mean What You Think

The Reserve Bank of Zimbabwe (RBZ) has moved to allay public concern over the recent rise in annual ZiG inflation, attributing the increase to statistical base effects rather than current price pressures.

RBZ Governor John Mushayavanhu, on Wednesday, 04 June, said that the jump in year-on-year inflation, from 85.7% in April to 92.1% in May 2025, is largely the result of a once-off price shock experienced in September 2024.

He said the current inflation trend does not reflect ongoing pricing dynamics but rather the delayed impact of a sharp increase in monthly inflation recorded last year.

In September 2024, month-on-month inflation spiked from 5.8% to 37.2% in October, creating what is known as a “base effect” in the calculation of annual figures.

Mushayavanhu reassured the public that monthly ZiG inflation has remained low and stable, below 1%, for the past three months, a trend that is more representative of current market conditions.

He encouraged economic players to rely on month-on-month inflation as a more accurate measure of purchasing power and price stability.

The rise in year-on-year inflation was only reported starting in April 2025 due to the introduction of the ZiG currency in 2023.

The transition from the Zimbabwe dollar (ZW$) to ZiG created a statistical gap that prevented the calculation of comparable annual inflation figures until a full year of ZiG-denominated prices had accumulated.

Looking ahead, the RBZ projects that annual inflation will remain elevated until September 2025 due to the lingering base effect, but is expected to begin declining from October.

The central bank forecasts that by the end of December 2025, annual ZiG inflation will fall below 30%, with a further drop toward single-digit levels over the medium term. Said Mushayavanhu:

The current annual inflation trajectory will therefore not affect consumer purchasing power and value preservation, as the inflation impact has already been realised.

He added that the Reserve Bank remains committed to maintaining a tight but supportive monetary policy stance to sustain the prevailing stability in monthly inflation. This, he said, will help balance the need for price stability with continued economic growth.