Eric Chiriga/Roadwin Chirara
LOCAL business leaders and economists say although year-on-year inflation is declining, policymakers should put in place more measures to address the root causes of inflation and
maintain the declining trend.
They say the inflation figure is still too high and companies still operate in a hyperinflationary environment.
According to figures released by the Central Statistical Office (CSO) this week, the year-on-year inflation rate has maintained its downward trend since the beginning of the year, declining to 314,4% in August from 362,9% in July.
The month-on-month inflation was also registered in August to 5,3%, down from the 9,5% recorded in July.
Both the Minister of Finance and Economic Development Herbert Murerwa and Reserve Bank of Zimbabwe (RBZ) governor Gideon Gono have described inflation as the country’s “number one enemy”.
They have vowed to reduce the level to less than 200% by year-end.
In an interview Trust Holdings Ltd group economist David Mupamhadzi said despite the decrease in inflation, a lot still needs to be done.
“The major issue on the ground is that there is still a lot of inflationary pressure and no effort is being made to address the real causes,” Mupamhadzi said.
He said there was a major challenge for policymakers to maintain the declining trends.
Mupamhadzi said the benefits from the decline should spill over to other key sectors of the economy.
Zimbabwe National Chamber of Commerce (ZNCC) president Luxon Zembe said the decrease in year-on-year inflation was most welcome but it should be reflected by the situation on the ground.
“We are impressed by the decline in inflation. The main challenge is that there should be a correlation with the reality on the ground,” Zembe said.
He said inflationary pressures were still evident and businesses continued to operate in a hyperinflationary environment.
“Inflation should go down to two digit figures because despite the decline the figure is not sustainable. The current level of inflation still has a significant impact on the economy particularly consumers,” he said.
The Consumer Council of Zimbabwe (CCZ) said it welcomed the decline in the rate of inflation but maintained that prices of basic commodities continued to rise.
CCZ public relations officer Tonderai Mukeredzi said the decline in inflation meant that the rate of the increase had decreased but commodities continued rising beyond the reach of many consumers.
He said more measures needed to be put in place to cushion customers against a generally tough economic period.
“The decrease is a welcome move but the policymakers have to put in place checks and balances to ensure that the fight against inflation is not ruined,” Mukeredzi said.
An economist with the Confederation of Zimbabwean Industries Bernard Mufute said the decline was a positive development but called for further policies to ensure it was sustained.
“It’s a positive development but policies have to be put in place such as those that would control growth in money supply which we have realised as the main cause for the increase in inflation,” Mufute said.
He said the CZI had put forward suggestions to the RBZ to control money supply.
“As an organisation we have come up with suggestions that we feel will play a role controlling money supply and have forwarded them to the central bank,” Mufute said.
RBZ governor Gono is targeting to achieve an inflation level of less than 200% by the end of the year.
In his monetary policy statement presented in December Gono said the benefits of reducing money supply growth in 2004 would, however, be realised more significantly in 2005 with inflation expected to decelerate progressively towards the medium-term target of low double digit levels by December, 2005.
“This reduction in money supply, however, demands a shift in the mind-set of all economic players and consumers,” Gono said. “It will not be business as usual.”