Zim year-on-year consumer inflation rises

 HARARE - Zimbabwe's year-on-year consumer inflation surged for the first time in seven months to 1,28 percent in August from 1,25 percent recorded in July.

From January to July this year, the country's inflation rate has been decreasing from 2,98 percent to 1,25 percent.

The Zimbabwe National Statistics Agency (Zimstat) on Friday said August inflation, as measured by the all items Consumer Price Index (CPI), increased marginally by 0,03 percentage points from the July figure.

The southern African country - which recorded a highest inflation rate of 231 million percent in August 2008 - has managed to maintain the year-on-year inflation not exceeding 5,5 percent following the formation of the inclusive government and the liberalisation of the economy in February 2009.

The marginal increase in inflation comes after economists had warned the new government to implement economic policies that will allow the country to continue registering single digit inflation.

In its July monthly review, the Reserve bank of Zimbabwe (RBZ) warned that inflation developments in the domestic economy, in the short to medium term, will continue to be influenced by movements international oil prices, US$/rand exchange rate, world food prices, as well as the level of aggregate demand.

"The upward trend in international oil prices since April 2013, if sustained, is expected to exert inflationary pressures in the domestic economy," said the central bank.

Further, the improvement in the global economy, as manifested in the recovery of the Euro zone and better than anticipated Annual non-food inflation also eased to one percent in July, from 1,35 percent in June 2013, following the softening of communication, recreation and cultural service prices.

RBZ noted that inflationary pressures under this category largely emanated from increases in housing rentals, prices of alcoholic beverages and tobacco as well as transport, health and educational services.

"Month-on-month inflation decelerated further output in China, India and the USA during the first half of 2013, is also expected to increase the demand for crude oil, thereby pushing up international commodity prices.

"Continued disturbances in oil producing countries, among them Egypt, are expected to exert upward pressure on international oil prices, with adverse implications for domestic inflation," said RBZ.

Figures released by the national statistics agency revealed that on a month-on-month basis, prices fell by 0,15 percent, after a 0,38 percent decline in July.

Market watchers expects Zimbabwe's year-on-year inflation to slow down to 3,9 percent from the projected 5 percent, due to the weakening rand.

The softening of the South African rand since the beginning of the year has helped Zimbabwe maintain a downward trend as it imports close to 60 percent goods from its southern neighbour.

Analysts said the depreciation of the South African currency was a result of the unending job disputes in the mining sector, particularly among platinum producers - a development that has seen output declining.

Zimbabwe is largely dependent on imports from South Africa.