Inflation slows down

HARARE - Inflation slowed down to 3,63 percent in August shedding 0,31 percentage points from 3,94 percent in July, attributed to stable food prices, the national statistics agency, Zimstat says.

This means that prices as measured by the consumer price index (CPI) increased by an average of 3,63 percentage points between August 2011 and August 2012 making the country one of the low inflation economies in the sub-Saharan region.

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.

Zimstat said the year-on-year food and non-alcoholic beverages inflation prone to transitory shocks stood at 4,20 percent whilst non-food inflation stood at 3,38 percent.

The month-on-month inflation rate in August 2012 was -0,18 shedding 0,41 percentage points on the July 2012 rate of 0,23 percent.

This means that prices as measured by all items on the CPI decreased at an average of 0,18 percent from July 2012 to August 2012.

The month-on-month 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 previous month in the current year.

“The month-on-month food and non-alcoholic beverages inflation stood at -0,11 percent in August 2012 shedding 0,09 percentage points on the July 2012 rate of -0,02 percent,” said Zimstat.

The month-on-month non-food inflation stood at -0,21 percent, shedding 0,54 percentage points on the July 2012 rate of 0,33 percent.

The CPI for the month ending August 2012 stood at 101,89 compared to 102,07 in July 2012 and 98,32 in August 2011.

Government is targeting average inflation rates of 4,5 percent in line with the Medium Term Plan objectives, but economic experts warn that failure to introduce policies aimed at increasing cash inflow within the economy will hinder efforts to consolidate economic gains.

Economists also believe the current CPI weightings are no longer consistent with current consumer spending patterns.

Information on the ground indicates that real inflation is somewhat higher than is presently being recorded as consumers are spending relatively more on things like communication, food, transport and accommodation, education and health leaving very little to go towards, hotels, restaurants, clothing and footwear, which are presently being accorded relatively higher weightings than they should have on the CPI. - John Kachembere

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