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Zimbabwe poverty threshold levels increase by 200% in 6 months

by Staff reporter
29 Oct 2019 at 06:59hrs | Views
Latest data released by ZimStat shows that poverty threshold levels for a family of five increased to ZW$883 in September from ZW$725,3 in August.

In growth terms, the movement represents a 22% month-on-month gain which compares to a rise of 14% between July and August.

The upward monthly movement in the average food basket's cost for a family of five is at a variance to the average monthly inflation which came off marginally from 18,2% to about 17% in September.

This variance is due to the varying composition in baskets under the two measures. Aggregate inflation is weighted across all goods and services while the food basket used for poverty datum line only factors movement in the cost of food.

However, what is clear from the report is that the average food basket for a family of five has gone up in successive months since February.

Cumulatively, the food basket for a family of five has gone up by 200% from $294 in March to $883 in September. Given the food poverty thresholds, it follows that demand for goods and services in the economy has been under severe pressure, as wages have trailed in growth.

This mismatch has resulted in falling aggregate demand compounded by the loss in purchasing power due to inflation. This trend is likely to continue throughout the rest of the year.

Zimbabwe Revenue Authority revenue numbers are showing a decline in value-added tax on local sales receipts which is a clear indication of low demand. Government has largely resisted adjusting wages in the second half period of the year, which has helped slow down the growth in money supply, consequently slowing down Zimdollar depreciation to the US dollar. Other cost lines have, however, gone up and these include government operations and maintenance costs which now account for a higher share compared to wages.


Source - Equity Axis

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