Zimbabwe inflation rate hits 2,91%

Zimbabwe's annual rate of inflation for June gained 0,20 percentage points to 2,91 from 2,71 percent in May, latest figures from the Zimbabwe National Statistics Agency (ZimStats) show.

"This means that prices as measured by the all items CPI increased by an average of 2,91 percent between June 2017 and June 2018," said ZimStats.

According to the ZimStats figures, changes in prices of food and alcoholic beverages drove the increase in inflation rate. Month on month, the inflation rate in June 2018 was shed 0,08 percentage points to close the month at -0,05 percent from May 2018 rate of 0,03 percent.

This means that prices as measured by the all items CPI decreased by an average rate of -0,05 percent from May 2018 to June 2018. The year-on-year food and non-alcoholic beverages inflation prone to transitory shocks stood at 5,12 percent whilst the Non-food inflation rate was 1,88 percent.

Month on month, the food and non-alcoholic Beverages inflation rate shed 0,25 percentage points to close the month at -0,23 percent from the May 2018 rate of 0,02 percent. The month on month non-food inflation rate stood at 0,04 percent, gaining 0,01 percentage points on the May 2018 rate of 0,03 percent.

Economists said there was need for Government to reign in on the three-tier pricing system which is causing a strain on consumer spending. At the same time, the rates charged for using plastic money as a means of transacting is still problematic and on the high end, albeit calls to embrace plastic money on the back of cash shortages.

"There is still room to improve on plastic money structure. The more affordable it is to swipe or use mobile money, the more the market will embrace plastic money. There will be no need even to charge extra on electronic transactions," said Zimbabwe National Business Council president Langton Mabhanga.

Mr Mabhanga added service providers also needed to reduce charges as this would cascade to the final goods and services, making them expensive for consumers. He said the high charges and the three-tier pricing were tantamount to price scheming and not conducive for a country trying to go cashless.

"As an economy, we need to get out of the price scheming," he said.

Although Government said it was illegal, three-tier pricing is still prevalent especially in the informal markets. Foreign currency shortages have also had a knock on effect on the economy with industry failing to access key inputs needed for production.

The tobacco selling season was expected to help ease the foreign currency challenges and increase liquidity. But the season which is about to close has failed to make an impact on both liquidity and foreign currency challenge, with the informal market selling the green back at a premium, although the official rate remains at par with the bond note, also unavailable on the formal market.