Subdued demand due to cash shortages in Zimbabwe has resulted in the annual rate of inflation for the month of July 2017, as measured by the all items consumer price index, to retreat to 0.14% on the June rate of 0,31%, economists say.
The economists, however, said the downward movement in the rate of inflation was not as “reflective realistically on the ground as costs of production remain high mainly caused by aggregate demand”, AllAfrica reported.
The Zimbabwe National Statistics Agency said this means that prices as measured by the all items CPI increased by an average of 0.14 percentage points between July 2016 and July 2017.
The year-on-year inflation rate is given by the percentage change in the index of the relevant month of the current year compared with the index of the same month in the previous year.
Africa University economics lecturer Thomas Masese attributed the inflation slowdown to subdued demand due to cash shortages. “We are basically experiencing demand pull inflation. Banks continue to reduce withdrawal limits. Though electronic money usage is increasing, it is largely expensive and the availability of POS machines is less widespread,” said Masese.
June inflation rate also shed 0.43% to close the month at 0.31% on the May rate of 0.75%. This means that prices as measured by the all items consumer price index increased by an average of 0.31% points between June 2016 and June 2017.
Another economist Abicia Ushewokunze said: “It has actually eased, looking at the trajectories upward drive, of what was focused on the year on year from 0.31% measure from last year.”
He said based on the index gas, fuels, water and housing, especially sub-indexes, declined by 2.4% year on year in July.
“Education sub index also eased off CPI inflation by 3.3% year on year in July compared to last years of 0.5%. “Also year on year non-food inflation rate stood at -0.33% shedding 0.19% points on the June 2017 rate of -0.14% and also annual projected closing rate according to international statistics,” said Ushewokunze.
“Regional parity comparisons pricing on commodities Zimbabwe remain high on prices. The South African rand, US dollar, international oil prices and also cash scarcity, has not helped the situation.”
