Inflation is back!

By | March 16, 2017

Zimbabwe slipped out of deflation in February after year-on-year inflation for the month stood at 0,06%, after gaining 0,71 percentage points on the January rate, latest data has shown.

Source: Inflation is back! – NewsDay Zimbabwe March 16, 2017

BY BUSINESS REPORTER

In January, year-on-year inflation was -0,65%.

“This means that prices as measured by the all items CPI [consumer price index] increased by an average of 0,06 percentage points between February 2016 and February 2017,” the Zimbabwe National Statistics Agency said yesterday.

“The year-on-year inflation rate is given by the percentage change in the index of the relevant month of the current year compared with the index of the same month in the previous year,” ZimStat said.

Zimbabwe slipped into deflation in September 2014 when the inflation rate went below zero.

Analysts say deflation is bad for an economy, as it keeps prices at low levels, reduces employment opportunities and increases debt burden on the consumer.

In his 2017 Monetary Policy Statement, central bank governor John Mangudya said inflation was expected to move into positive territory in 2017 for the first time since September 2014, on the back of anticipated increase in international oil prices and domestic sector recovery.

“There are strong indications that oil supply will fall on the global market, following the agreement by oil producing nations to cut production in 2017,” he said then.

“This positive trajectory is expected to be reinforced by the general recovery of the economy in 2017 on account of the expected strong agricultural outturn, which is going to increase disposable income.”

Mangudya said the bank was projecting inflation of around 1% to 2% in 2017.

One thought on “Inflation is back!

  1. Morty Smith

    This is only the beginning. The money supply is being rapidly expanded. Massive inflation will follow

    Reply

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