Zimbabwe eyes price relief towards end of 2025
After years of persistent inflationary pressures, Zimbabwe is approaching the latter half of 2025 with cautious optimism, as recent economic indicators and government policy measures point towards a potential decline in the prices of goods and services. While the path to full price stability remains a work in progress, current trends offer a glimmer of hope for weary consumers.
The Reserve Bank of Zimbabwe (RBZ) has forecast that the annual ZiG inflation rate — which experienced a temporary spike in the aftermath of the September 2024 economic shock — is projected to decline to below 30% by December 31, 2025. Looking further ahead, authorities expect inflation to move towards single-digit levels. This outlook is being driven by a commitment to maintaining a tight monetary policy aimed at balancing inflation control with economic growth. Monthly ZiG inflation is expected to remain low and stable in the months ahead.
Factors Supporting the Easing of Prices
Several key factors are converging to create conditions conducive to softer prices:
The RBZ's sustained adherence to tight monetary policy, including strict reserve money targeting and continued interventions in the foreign exchange market, is helping stabilize the exchange rate. A stable exchange rate is essential in Zimbabwe's multi-currency environment, reducing imported inflation and allowing businesses to price goods more predictably.
Favorable weather patterns during the first half of 2025 have resulted in improved agricultural production, a critical factor given that food and non-alcoholic beverages account for 31% of Zimbabwe's Consumer Price Index (CPI). A good harvest is expected to lead to lower food prices, easing a key driver of inflation.
Following the April 2024 introduction of the ZiG currency and subsequent measures, both the official and parallel market exchange rates have shown signs of stabilization. This reduced volatility has been welcomed by businesses, enabling them to set prices with greater confidence and avoiding the frequent adjustments seen in previous years.
The government's efforts to close the 2025 fiscal financing gap through rationalized spending and improved public financial management are also seen as vital. A more disciplined fiscal stance reduces the risk of excessive money supply growth, helping to keep inflationary pressures in check. According to the World Bank, greater price stability will also enhance government revenues by recovering inflation-eroded tax collections.
On the international front, global inflation is forecast to continue declining through 2025 and 2026. This trend will likely benefit Zimbabwe by reducing the cost of imported goods and production inputs, helping further contain domestic inflation.
Despite the positive outlook, challenges persist. While month-on-month inflation for both ZiG and USD transactions has cooled, year-on-year USD inflation remains elevated, underscoring the country's continued structural vulnerabilities and heavy import dependency. Furthermore, newly introduced tax measures at the beginning of 2025 are noted as potential constraints on already stretched household budgets.
Nevertheless, international institutions such as the IMF and the World Bank broadly align with the RBZ's projections, anticipating a 6% economic growth rate in 2025. This anticipated growth, paired with easing inflation, is expected to gradually restore consumer purchasing power and reduce the overall cost of living.
As the second half of 2025 unfolds, Zimbabwean consumers will be watching closely for tangible reductions in the cost of goods — a long-awaited relief from years of economic hardship. The success of current policies and the positive impact of a strong agricultural season will be pivotal in determining whether this fragile optimism translates into reality.
