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Zimbabwe's 'rigged' inflation remains high at 18.4%

by Staff reporter
29 Sep 2023 at 06:25hrs | Views
In September, Zimbabwe's annual inflation rate remained high at 18.4%, despite the adoption of a geometric aggregation method by the authorities for analyzing the consumer price index (CPI). The Zimbabwe National Statistics Agency (ZimStat) has decided to shift from an arithmetic aggregation method to a geometric aggregation method for calculating the blended inflation rate based on recommendations from the Southern African Development Community (Sadc) in July.

While the new method showed a significant drop in the annual inflation rate, it cannot be directly compared to August's 77.2% due to the different calculation methods used. ZimStat's prices statistics manager, Thomas Chikadaya, explained that the substantial difference was due to the new methodology, which provides a more accurate comparison between the US dollar and the Zimbabwean dollar's economic weights.

Chikadaya emphasized that ZimStat follows international recommendations from organizations like Sadc and the IMF (International Monetary Fund) rather than receiving instructions from the Treasury. The shift in methodology has improved the accuracy of inflation statistics by considering the participation of both the US dollar (which comprises approximately 80% of the weights) and the Zimbabwean dollar (around 20% of the weights).

However, Chikadaya noted that the geometric aggregation method does not include the calculation of the Total Consumption Poverty Line (TCPL), as it employs a separate calculation method. According to ZimStat, the TCPL for Zimbabwe in September was ZWL$95,462.53 per person, representing a 4.8% increase compared to August.

Chikadaya clarified that while the new methodology applies to all indices, the calculation of the poverty datum line follows its own specific methodology, in accordance with international guidelines.

This change in methodology marks the second alteration to inflation statistics calculations in Zimbabwe this year. In March, the blended inflation rate was introduced, which faced criticism from some quarters.

Source - newsday