THE International Monetary Fund (IMF) has reported that Zimbabwe’s annual inflation rate reached 635,31% last year, the highest in the world amid growing ZiG volatility.
Zimbabwe led all the nations, followed by Argentina with an annual inflation rate of 229,8%, Sudan (200,1%), South Sudan (120,6%), and Turkiye (60,9%) rounding up the top five globally.
Local authorities have abandoned reporting the annual inflation rate because the ZiG currency was introduced in April, thus, such reports are expected to resume starting this April.
The ZiG’s volatility is causing the inflationary pressure and is now affecting US dollar pricing.
According to the Zimbabwe National Statistics Agency (ZimStat), the greenback month-on-month inflation rate rose 10,9 percentage points to 11,5% this month as firms are using this currency to cover for the ZiG volatility.
Experts have warned that the 233,03% increase in vote appropriations to ZiG322,63 billion for the current fiscal year, amid low revenue sources, will further compound inflationary pressures.
“If you do the budget in a volatile sort of currency, it creates all sorts of problems because of the time value of money. So, what you allocate when people receive whatever they voted to get, it may not be able to purchase the things that it was meant to purchase,” a leading economist who asked not to be named said.
“We have seen this where what is allocated for the public sector investment programme, at the end of the day, is insufficient to meet what originally was supposed to be purchased.
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“So, it’s always a problem, especially given that the original votes of the ministries are also reduced through the budgetary process because usually they are always higher than what the Minister of Finance is able to finance.”
The economist added that consequently, it created a challenge in terms of the implementation of the budget.
“The ZiG is under pressure. Is it not reasonable for [Finance] Minister Ncube to use these reserves to support the people or save the ZiG? The banking sector must be fixed,” another economist Itai Zimunya said.
“The RBZ [Reserve Bank of Zimbabwe] must also facilitate positive interest rates to support savings in the economy. Minister Ncube must walk the talk and stop externalising our hard-earned forex.”
According to ZimStat, the total consumption poverty line for one person was ZiG1 255,78 this month, up from ZiG1 156,67 in December 2024.
This means that an individual required that much to purchase both non-food and food items as of January in order not to be deemed poor, according to ZimStat.
Meanwhile, the food poverty line for one person in January 2025 was ZiG861,14, up from ZiG805,95 in December 2024.
These increases are on the back of increased inflationary pressures.
“Companies are closing because of viability issues that persist. The economic environment, that is the inflationary pressure and policies being pursued, are not conducive,” Vince Musewe, another financial expert, said.
“How then does one expect to attract foreign investment when the local business sector is not happy?”
Economist Chenayimoyo Mutambasere said Zimbabwe’s economic environment was marked by significant challenges, “including limited foreign currency reserves standing at a very low US$540 million with high inflation. Bureaucratic hurdles, corruption, and high taxation are major deterrents”.
The ZiG month-on-month inflation rate was 10,5% in January 2025, gaining 6,8 percentage points from December 2024.
