Zimbabwe's inflation rate shows signs of easing

Zimbabwe's weighted and US dollar monthly inflation rates eased in May 2025, with the weighted inflation dropping by 0.3 percentage points to reach 0 percent, indicating progress towards greater economic stability across both local and foreign currency price levels.

Data released by the Zimbabwe National Statistics Agency (ZimStat) reveals that the US dollar (USD) month-on-month inflation rate fell to -0.3 percent in May, down by 0.5 percentage points from April's 0.2 percent. Meanwhile, the Zimbabwe Gold (ZiG) currency saw a month-on-month inflation increase of 0.9 percent in May, up 0.3 percentage points from April's 0.6 percent.

This mixed but overall positive development led to a decline in the combined weighted inflation rate, raising hopes of a more predictable and stable economic environment in the near future.

Speaking during the presentation of price statistics on Tuesday, ZimStat Acting Director of Macroeconomics, Mr. Munyaradzi Chikadaya, provided further context:

"The USD Consumer Price Index (CPI) was 121.76 in May 2025 compared to 122.12 in April 2025. In May 2024, the index stood at 106.85.
The ZiG Consumer Price Index was 187.42 in May 2025, up from 185.68 in April 2025, and 97.58 in May 2024."

Breaking down the inflation by categories, the food and non-alcoholic beverages segment recorded a USD month-on-month inflation rate of -0.9 percent in May, a drop of 0.9 percentage points from April's flat rate. The USD non-food inflation rate remained steady at 0 percent, declining 0.3 percentage points from April's 0.3 percent.

In contrast, the ZiG currency showed a 1.6 percent month-on-month inflation in the food and non-alcoholic beverages category, gaining 1.8 percentage points from April's -0.2 percent. ZiG non-food inflation slowed to 0.6 percent in May, down 0.5 percentage points from 1.1 percent in April.

Reflecting on the trends from January to May 2025, Mr. Chikadaya noted:

"In USD terms, the average month-on-month inflation rate was 2.4 percent, while in ZiG it was 2.5 percent."

The data reflects an overall easing of price pressures across key consumer goods categories. Zimbabwe's dual-currency economy makes USD price movements a critical barometer of the broader economic condition, and the drop in monthly inflation is a promising sign.

However, annual inflation rates remain elevated. The year-on-year inflation rate for the USD, measured by the all-items USD Consumer Price Index, stood at 13.9 percent in May 2025, indicating that prices increased by an average of 13.9 percent between May 2024 and May 2025.

For the ZiG currency, the year-on-year inflation rate was significantly higher at 92.1 percent over the same period, highlighting persistent inflationary pressures in the local currency.

Despite the high annual figures, the sharp month-on-month decline in USD inflation suggests a positive trajectory toward improved price stability. Analysts expect that sustained monthly drops in inflation, as seen in May, will gradually translate into a lower annual inflation rate in the months ahead.

As Zimbabwe continues to navigate the challenges of its dual-currency system, these latest figures provide cautious optimism for more stable economic conditions.