HomeBusiness DigestWorries Over Delayed Inflation Figures

Worries Over Delayed Inflation Figures

THE frequent delays by the Central Statistical Office (CSO) in releasing inflation figures could have a serious impact on business planning and promotion of foreign direct investment, analysts have warned.


The CSO, which last released inflation figures for January, this week dismissed the leaked year-on-year May inflation figures of around 1 700 000% saying it was “mere speculation”.

Still the CSO does not seem to be in a hurry to release the figures. As inflation gallops the release of the figures has becomes more intermittent. Even those figures that are regarded as official like the 165 000% for February did not come from the CSO.

CSO director general, Moffat Nyoni, this week told businessdigest that he was not aware when the inflation figures for March and April would be released.

He said: “We do not have enough observations and products to come up with accurate inflation figures.

I can’t say when we will have the figures.” Even as Nyoni was trying to give an explanation for the delays speculation abounds in the market that it had something to do with a directive from his bosses at the Ministry of Finance to hold on to the figures for political reasons.

The biggest impact of the lack of inflation figures is being felt by companies which say they are now unable to plan.

Companies that want to release their inflation-adjusted results might have to wait until the figures are available. Some companies face suspension from the stock exchange if they fail to release their results.

The other problem is that even if the CSO manages to scratch around for the April figures, the companies will still struggle to get a clear indicator because the March figure is missing.

Independent economist Eric Bloch said the delays in releasing the figures would make business forecasting difficult. “This lack of concrete and authoritative data makes planning difficult,” Bloch said.

“It lowers business confidence. Independent statistics are not comprehensive — they can be sheer estimates,” Bloch said.

Zimbabwe National Chamber of Commerce (ZNCC) president, Marah Hativagone, said the delays were now forcing companies to depend on independent statitistics which she said were not far from the official figures.

Banks and other financial institutions often use independent figures compiled by the Reserve Bank of Zimbabwe whilst other companies often use statistics from accounting and auditing firms. The figures cannot be regarded as official.

“The delays are certainly a problem but companies are never short of a reference point, said Hativagone. “They often use independent figure which often are close to the official figures,” she said.

Hativagone said official figures by the CSO are often inaccurate owing to acute shortages of food commodities in the food basket. The Consumer Price Index is measured using price changes of basic commodities in the food basket.

Acute food shortages caused by price controls implemented by the National Incomes and Pricing Commission are discrediting the authenticity of official figures.

“The CSO has in the past released figures which are far from reality because they use a basket of commodities which are not available in shops,” she said.

Businessman Luxon Zembe said the delays were now forcing companies to compromise on accounting standards.

Companies listed on the Zimbabwe Stock Exchange are pushing for the release of financial results in United States dollar terms because of delays by the CSO. “This has an impact on companies compiling end of year financial results,” said Zembe. “Companies now have to declare historical figures rather than inflation-adjusted figures as required by international accounting standards.”

He said this was “prejudicial” to companies adding that relying on independent figures was a “cumbersome administrative process”.

The delays have caused mayhem in the economy which is already battered. The man on the streets has paid the price as companies review prices using their own assessment of the inflation trends. Each company tends to have their own figures to justify their own prices.

This results in massive distortions in the market. The tension between employers and employees is also mounting because there is no agreement on the inflation figures to use during salary negotiations.

Zimbabwe Allied Bank Group chief economist David Mupamhadzi attributes the recent upward spiraling of prices to a “cocktail of factors” that include a weakening local currency, excessive money supply growth, ballooning government expenditure and price distortions.

“The movement of prices is consistent with other countries that faced hyperinflation, and what is cleared is that if there is no concerted effort from all the stakeholders,” Mupamhadzi said.

“Unless government, labour, private sector, civic societies and politicians work together, the economy will never find a solution,” said Mupamhadzi.

Mupamhadzi added that foreign direct investment complemented with a free-market economy could turn around the economy.

“The free economy is a step in the right direction however there is still need to have huge inflows to support the on going reforms. Without these inflows the exchange rate will continue to fall and inflation will continue to hit all time record levels.”

There are genuine fears in the market that government is blocking the inflation figures to manage its battered reputation ahead of the runoff.

Progress Teachers’ Union of Zimbabwe secretary general, Raymond Majongwe, said government was afraid of releasing the figures because it would cause discontent and increase pressure on government to review civil service salaries.

“We know what the inflation figure is, that is why we are demanding $76 billion a month from $6 billion. These are the demands that government is afraid of,” said Majongwe.

The government has often blamed Western sanctions for the worsening economic situation.

By Bernard Mpofu

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