THE prices of non-food items rose in October which saw month-on-month inflation increasing by 1,5 percentage points to 2,5%, latest data showed.
The annual inflation for October remained subdued at 17,8%.
In September, the month-on-month inflation rate was 1% while annually it was 18,4%.
The increase in monthly inflation and the subdued performance of the annual rate come as the local currency is depreciating by nearly 3% and 10%, against the greenback, on the official and parallel forex markets, respectively.
In the Zimbabwe National Statistics Agency (ZimStat) October inflation statistics released yesterday, the agency’s prices statistics manager Thomas Chikadaya told the paper that water and electricity costs contributed to the rise in the month-on-month inflation rate.
“Surely the inflation was driven mainly by housing, electricity and water, followed by food and non-alcoholic beverage as was said in the presentation,” he said.
According to the Zimstat, the consumer price index (CPI) for October was 103,44, up by 2,49 points from 100,95 recorded last month.
“For the month for October 2023, the CPI for housing, water, electricity, gas, and other fuels had highest contribution of 1,4% followed by food and non-alcoholic beverages with a contribution of 0,8%,” ZimStat said, in its report.
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The rise in month-on-month inflation comes as a recent International Monetary Fund (IMF) staff team told Treasury and monetary authorities that the economic outlook would depend on progress toward macroeconomic stabilisation and transformational structural reforms, as external conditions worsen.
The IMF staff team was led by Wojciech Maliszewski and it mission ran from October 18 to 25.
This comes after the fund reviewed the country’s gross domestic product (GDP) growth upwards by 1,6 percentage points to 4,1% this year and by one percentage point to a 3,6% GDP growth for 2024.
“Local-currency (ZWL$) inflation and exchange rate pressures have abated in recent months, following significant price increases and exchange rate depreciation in the second quarter of 2023. The IMF mission notes the authorities’ recent efforts into stabilising the foreign exchange market and lowering inflation through the tightening of ZWL$ liquidity conditions,” the global lender said on Wednesday.
“The mission welcomes the removal of surrender requirements on domestic sales in FX [forex]. The announced plan for the transfer of RBZ FX liabilities to the Treasury is also welcome. Nevertheless, the parallel FX market premium is large at above 30% and ZWL inflation remains high.”
The IMF projects that Zimbabwe’s annual inflation rate will reach nearly 400% by year end, and about 190% next year.
“There is an urgent need to accelerate the FX market reform, by allowing more flexibility in the official exchange rate through a more transparent and market-driven price discovery; removing the restrictions on the exchange rate at which banks, authorised dealers, and businesses can transact; and further minimising export surrender requirements,” it said.
