Zim deflation persists

HARARE - Zimbabwe’s annual inflation for August has remained in the negative territory at 2,77 percent, official statistics released on Wednesday show.

Figures released by the Zimbabwe Statistical agency (Zimstat) revealed that prices as measured by the all items Consumer Price Index (CPI) decreased by an average of –2,77 percentage points between August 2014 and August 2015.

“The year on year Food and Non Alcoholic beverages inflation prone to transitory shocks stood at –3,59 percent whilst the Non-food inflation rate was –2,38 percent,” Zimstat said.

Zimbabwe’s inflation once regarded as the highest in the world during the country’s economic meltdown that came to an end in 2009, has continued to trend downwards.

The sustained drop indicates weak consumer demand against a backdrop of tight liquidity conditions coupled with benefits accrued from the fall of the South African rand against the United States dollar.

Prices remain subdued on the back of weakness in the labour market due to relatively stagnant salaries as well as the lack of credit will continue to act as a headwind to discretionary consumer spending.

According to Zimstats, on a monthly basis, inflation stood at – 0,31 percent shedding 0,36 percentage points on the July 2015 rate of 0,06 percent.

Low and declining inflation, whilst indicative of price stability, could be also an indicator of subdued economic activity. The liquidity situation in the country remains constrained, as a result there is weak aggregate demand for goods and services.

 

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