Inflation is rising again in Zimbabwe, at a time when there is currency instability in the country.
Both annual and monthly inflation for October rose substantially, as monetary authorities have in recent weeks tried to rein in illegal foreign currency dealers whom it accuses of fuelling price increases.
According to data released by the Zimbabwe National Statistics Agency (ZIMSTAT) on Wednesday, monthly inflation for October rose 1.67 percent to 6.40 percent from September’s rate of 4.73 percent.
Annual inflation quickened to 54.49 percent, from last month’s 51.55 percent.
The Zimbabwean dollar has lost ground to the U.S. dollar over the past week. The local currency traded at 93.081 against the U.S. dollar at last Tuesday’s forex auction but weakened to 97.136 against the dollar this week.
Despite losing ground, the Zimbabwean dollar still lags behind black-market rates of around 140 Zimbabwe dollars per 1 U.S. dollar.
Zimbabwe has been facing a perennial shortage of foreign currency to meet its import requirements, and this forces businesses to source the greenback on the parallel market at high rates.
This results in an increase in the price of basic commodities.
Zimbabwe’s annual rate of inflation has consistently declined from a peak of 837.5 percent in July last year, to a double-digit rate starting in August 2021, following the introduction of tight monetary and fiscal measures by the government.
Among the measures is the introduction of a foreign exchange auction trading system by the central bank last year that has brought stability to the foreign exchange market.
Despite exogenous global inflation factors, Zimbabwe’s central bank has projected inflationary pressures in the country to remain subdued in the short-to-medium term due to a better agricultural season this year.
It expects annual inflation to close the year at 35 percent. Enditem
