Taurai Mangudhla Business Writer
Zimbabwe’s annual inflation rate has retreated on a monthly basis in the first quarter of the year and remains under 4 percent, annualised.
The official inflation rate is built arounda basket of essential goods and services, items which the Government and the REserve Bank of Zimbabwe take a lot of time and trouble to feed with adequate foreign currency at official rates so keeping prices stable.
This means that those people, the poorer majority see very little inflation.
However, those who have a high percentage of non-essential imported items in their monthly spending have seen significant increases in their cost of living over the past eight months and much of the foreign exchange used to import goods like scotch whisky, television sets, South AFrican biscuits, motor spares, and other luxuries, semi-luxuries or simply goods that are not essential to survival has to be bought on the parallel market.
A great deal depends on what priority has been given and how long it takes the priority item to rise to the top of the list for payment.
It is disparities like these, between official statistics and the reality experienced by some consumers, especially those who are in the middle and upper income groups, which have raised questions about whether we need a two-tier inflation rate.
This in fact existe in colonial times: there was an inflation rate for “Africans”, later relabelled the lower-income cost of of living index. This basket, significantly updated, is the sort of basket of goods and set of weightings that ZimStat use for the present official rate.
At the same time there was a “European” cost of living, the settlers having a higher standard of living. This was sanitised as an upper-income cost of living index later on and was later still dropped.
There are now suggestions that a upper-income index, built after research into a basket of goods, be re-introduced along with perhaps an industrial purchases index.
In January this year, annual inflation stood at 3,522 percent before dropping to 2,975 percent and further to 2,683 percent in February and March respectively according to the Zimbabwe National Statistical Agency (ZimStat).
In January, ZimStats said the year-on-year inflation rate for the month of January 2018, as measured by the all items Consumer Price Index (CPI) stood at 3,52 percent, gaining 0,06 percentage points on the December 2017 rate of 3,46 percent, meaning that prices as measured by the all items CPI increased by an average of 3,52 percent between January 2017 and January 2018.
The month-on-month inflation rate in January 2018 was 0,30 percent shedding 0,23 percentage points on the December 2017 rate of 0,53 percent, meaning that prices as measured by the all items CPI increased at an average rate of 0,30 percent from December 2017 to January 2018.
In March, the year-on-year inflation rate for the month as measured by the all items CPI stood at 2,68 percent, shedding 0,3 percentage points on the February 2018 rate of 2.98 percent.
The month-on-month inflation rate in March 2018 was – 0,25 percent shedding 0,33 percentage points on the February 2018 rate of 0,08 percent.
Inflation in January 2016 was in the negative territory, reaching the lowest point of -2,307 percent in March before rising throughout the year to close at -0,931 percent in December.
Deflation slowed even further in 2017 to start the year at -0,651 percent before moving into the positive territory in February at 0,062 percent.
Inflation fluctuated between February and September 2017, but remained under 1 percent until it made a huge leap in October to 2,236 percent from 0,775 percent the previous month.
The annual rate reached 2,97 percent in November 2017 before breaching the 3 percent mark in December to 3,456 percent.