Zim remains in deflation

HARARE - Zimbabwe remains in deflation mode with latest statistics revealing that its annual inflation stood at -0,19 percent in May, gaining 0, 07 percentage points on the April rate of -0, 26 percent.

“This means that prices as measured by the all items Consumer Price Index (CPI) decreased by an average of 0,19 percentage points between May 2013 and May 2014,” the Zimbabwe National Statistics Agency (Zimstats) said.

The year-on-year food and non-alcoholic beverages inflation, prone to transitory shocks, stood at -3, 75 percent while non-food inflation rate was 1, 62 percent.

Month-on-month inflation in May was -0, 13 percent, down 0, 71 percentage points on April’s 0, 58 percent.

Economists have predicted that the deflationary pressures are likely to persist unless there is meaningful fresh capital injection into the economy and government implements policies to help the country out of deflation.

“We predict that Zimbabwe will experience deflation over the coming months, with a possible return to inflation in the second half of the year as the South African rand strengthens,” said Business Monitor International, an international think tank.

It highlighted that Zimbabwe’s external accounts remain under pressure due to a massive import bill, lower remittance inflows and insufficient foreign direct investment.

Zimbabwe is grappling with a widening trade deficit hovering at around $4 billion.
 

Comments (2)

deflation in Zim is not bad,its a realignment of previously distorted prices to real productivity,the problem is not deflation as most goods consumed here are imports the problem however is a fall in domestic income and a skewed model in the distribution of income caused by corruption which ultimately continues to cause a financial crowidng out effect to the would be productive sector which can add to our aggregate demand forces,if this was so you will find that GDp will grow as people will buy more .unfortunately Government with the fiscal bill will rob peter to pay paul who otherwise will channel funds to buy merces and store it in Mauritius at no benefit to us. but anyway ask the mugagas and other economists they know..kkkkk

zvakaoma - 18 June 2014

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