HomeBusiness DigestInflation gains on cash crisis

Inflation gains on cash crisis

ZIMBABWE’S year-on-year inflation rate gained 0,37 percentage points in the month of October from the September rate of -1,33% as costs rise due to the impact of the country’s cash shortages while prices of goods are also spiking after government banned importation of various goods without prior clearance under Statutory Instrument 64.

By Taurai Mangudhla

Economic analyst Evonia Muzondo said the cash shortages are forcing prices.

“It is the cost of money really, because we import almost everything and some of it informally. Some businesses are now buying cash at a premium in order to import and this cost is passed on to the consumer,” Muzondo said.

“Another issue is that some businesses now have prices for cash and Real-Time Gross Settlements (RTGS). The RTGS price is higher and this causes an increase in prices,” added Muzondo.

Economist Tapiwa Mashakada said the inflationary impact of SI 64 is filtering through.

“Prices are creeping up gradually. Also, the effect of plastic money on aggregate demand is having the effect of price increases,” said Mashakada.

The Zimbabwe National Statistics Agency (Zimstat) said the month-on-month inflation rate in October 2016 was 0,09%, gaining 0,35 percentage points on September 2016 rate of -0,26%.

The year-on-year food and non-alcoholic beverages inflation stood at -2, 03% while the non-food inflation rate was -0,45%. The month-on-month food and non-alcoholic beverages inflation rate stood at 0,40% in October 2016, gaining 0,46 percentage points on the September 2016 rate of -0,06%. The month-on-month non-food inflation rate stood at -0,05 %, gaining 0,29 percentage points on the September 2016 rate of -0,34%.

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