Good news as monthly inflation falls below RBZ 5% target. Annual inflation for September slowed to 659.40% from 761.02% in August as currency stability brought in by the foreign currency auction system continues, with businesses shunning away from the parallel market, whose rate was an important economy-wide price signal. The IMF has projected inflation to close 2020 at 495% in its latest World Economic Outlook report.
Latest statistics from Zimstat show that the month on month inflation rate for September was 3.83% losing 4.61 percentage points on the August 2020 rate of 8.44%. This is below the Reserve Bank of Zimbabwe’s year end target of 5% but any further decline going forward will raise the alarm bells on an equally ghastly economic creature: disinflation.
Decline in price increases were seen across most weights but more pronounced within the food cluster as adjustments were made to link prices to the auction forex rate. Over the past two years, monetary growth and exchange rate depreciation were the major determinants of the inflationary process. Inflation is expected to drop to double digits next year as the economy converges to a new steady state.
The controversial blended inflation also followed suit closing at 376.29% from 420.91% the previous month. According to the RBZ, blended annual inflation is forecast to gradually fall to 249% by December 2020 and further to single digit levels by December 2021.
The blended CPI month on month inflation rate in September 2020 turned negative at -0.47% shedding 1.88 percentage points on the August rate of 1.41%. The year on year inflation rate for the month of September 2020 as measured by all items blended CPI was at 376.29% down from 420.91% a month earlier.
The CPI for the month ending September 2020 stood at 2 205.24 compared to 2 123.97 in August 2020 and 290.39 in September 2019. The blended CPI for the month ending September 2020 stood at 100.93 compared to 101.41 in July 2020 and 21.19 in August 2019.
Source – Financial Express
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