Zim year-on-year inflation rises

HARARE - Zimbabwe’s consumer price inflation rose by 0,21 percent year-on-year in March from a 0,06 percent increase in February, according to data from the Zimbabwe National Statistics Agency (Zimstat).

This comes after inflation moved into positive territory for the first time in two years in February.

“The year-on-year inflation rate (annual percentage change) for the month of March 2017 as measured by the all items Consumer Price Index (CPI) stood at 0,21 percent, gaining 0,15 percentage point on the February 2017 rate of 0,06 percent,” Zimstat said.

This means that prices as measured by all items CPI increased by an average of 0,21 percentage points between March 2016 and March 2017.

The month-on-month inflation rate in March 2017 was 0,03 percent, shedding 0,58 percentage points on the February 2017 rate of 0, 61 percent.

This means that prices as measured by the all items CPI increased at an average rate of 0,03 percent from February 2017 to March 2017. The rising inflation has stalked fears of the hyperinflationary of a return to the 2008 hyperinflationary period where prices more than doubles in a day.

Veteran economist John Robertson said the main driver was the Value Added Tax (Vat) hike on meat, cereals and potatoes.

Finance minister Patrick Chinamasa in February hiked Vat to 15 percent on all meat products, including offals and fish, rice, maheu and margarine, under Statutory Instrument (SI) 20 of 2017 as one of a package of measures Harare hoped would help unlock funds needed to boost government finances.

“They removed that off but they did not remove on everything, it was also still there on packaging and machinery, though it wasn’t formally applied.  The prices didn’t come down,” he said, referring to the reversal of the Vat hike after a huge public outcry and sustained pressure from political parties.

Another economist Albert Makochekanwa said the inflation was spawned by high demand of consumer goods following the opening of the tobacco selling season on March 15.

“Well, I think it is as a result of increased demand; the opening of the tobacco season last month, when they get their money and they spend it, creating demand.”

Robertson pointed out that businesses were paying a premium to buy foreign currency for imports and passing on the burden to consumers.

While John Mangudya, the governor of the Reserve Bank of Zimbabwe, stated recently that he expected inflation to move into positive territory in 2017 for the first time since September 2014, supported by the anticipated increase in international oil prices and a recovery in the domestic economy, NKC African Economics said it believed that the recently issued bond notes may also be a contributing factor.

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