The annual inflation rate falls to 0.14pc

The Chronicle

Harare office
According to economists, LOW demand due to liquidity shortages caused the annual inflation rate for the month of July 2017 to decline, as measured by the Consumer Price Index of all items, to 0, 14% compared to June rate of 0.31%. .

Economists, however, said the downward movement in the inflation rate was not so “realistic on the ground, as production costs remain high, mainly due to aggregate demand.”

Zimbabwe’s National Statistics Agency said this means prices as measured by the all-item CPI increased by an average of 0.14 percentage points between July 2016 and July 2017.

The year-on-year inflation rate is given by the percentage change in the index for the relevant month of the current year compared to the index for the same month of the previous year.

African University economics professor Thomas Masese attributed the slowdown in inflation to weak demand due to lack of liquidity.

“We are essentially experiencing demand-driven inflation. Banks continue to reduce withdrawal limits. Although the use of electronic money is increasing, it is largely expensive and the availability of point-of-sale machines is less widespread, ”said Masese.

The June inflation rate also fell 0.43% to end the month at 0.31% compared to May’s rate of 0.75%. This means that prices as measured by the All-Item Consumer Price Index increased by an average of 0.31 percentage points between June 2016 and June 2017.

Another economist, Dr Abicia Ushewokunze, said: “It actually eased, looking at the upward trajectories, of what was focused year-over-year versus the 0.31% measure. from last year.”

He said based on the gas, fuels, water, housing index, in particular the sub-indices fell 2.4% per bonus year in July.

“The education sub-index also reduced CPI inflation by 3.3% year-on-year in July compared to previous years by 0.5% previously.

“The year-over-year non-food inflation rate stood at -0.33%, losing 0.19% from the rate of -0.14% in June 2017 and also from the rate of annual closing projected according to international statistics, “said Dr. Ushewokunze.

“Regional Price Parity Comparisons on Commodities Zimbabwe remains high on prices. The South African rand, the United States (dollar), international oil prices and also the scarcity of liquidity have not improved the situation.

In his midterm statement on monetary policy, Reserve Bank of Zimbabwe Governor Dr John Mangudya said the outcome of inflation over the rest of the year will be primarily influenced by the changes in national taxation, currency availability, international oil prices and the US dollar / South African rand. to exchange.

The annual headline inflation rate, which had been in deflation since September 2014, fell into positive territory from -0.65% in January 2017 to 0.31% in June 2017 due to the expansionary stance of fiscal policy which led to an increase in the budget deficit. to $ 1.4 billion in 2016.

Dr Ushewokunze said bonds, issued to encourage exports and to alleviate liquidity shortages, should be continually hedged against a reserved currency and that there should be strict monitoring for leaks and devaluation of the l ‘obligation resulting from unscrupulous entities that have resorted to cross-ratings.

“The RBZ should constantly apply strict measures to curb a further fall in the futuristically predicted high inflation rates, because the volume also in circulation should always remain within a certain limit and the amounts to a controllable extent,” he said. -he declares.

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