Inflation declines

via Inflation declines – DailyNews Live 18 NOVEMBER 2013

Zimbabwe’s annual inflation retreated by 0, 27 percentage points to settle at 0,59 percent in October 2013 from 0,86 percent recorded in prior month, the Zimbabwe National Statistics Agency (ZimStats) said.

This means that prices as measured by the all items’ Consumer Price Index (CPI) increased by an average of 0,59 percentage points between October 2012 and October 2013.

Market observers say the sustained drop indicates weak consumer demand against a backdrop of tight liquidity conditions that have eroded most households’ disposable incomes coupled with benefits accrued from the fall of the South African Rand against the United States dollar.

ZimStats said month-on-month inflation rate was – 0, 01 percent, shedding 0,04 percentage points from September’s 0,05 percent.

“This was mainly weighed down by declines in routine Maintenance, Medical aid contributions and to a lesser extent Food and Clothing weights,” it said.

The year-on-year food and non-alcoholic beverages inflation prone to transitory shocks stood at -0,74 percent while the non-food inflation rate stood at 1,25 percent.

The month-on-month food and no-alcoholic beverages inflation stood at 0,04 percent in October 2013, shedding 0,22 percentage points on the September 2013 rate of – 0.18 percent.

The month-on month non-food inflation settled at -0,04 percent, shedding 0,21 percentage points on the September 2013 rate of 0,17 percent.

The CPI for the month ending October 2013 stood at 100,32 compared to 100,33 in September 2013 and 99,74 in October 2012.

Zimbabwe’s year-on-year inflation is expected to slow down to 3,9 percent from the projected 5 percent, due to the weakening rand.

The softening of the South African rand since the beginning of the year has helped Zimbabwe maintain a downward trend as it imports close to 60 percent goods from its southern neighbour.

Analysts said the depreciation of the South African currency was a result of the unending job disputes in the mining sector, particularly among platinum producers — a development that has seen output declining.

However, Zimbabwe is largely dependent on imports from South Africa.

This has led to calls by economic analysts for government to create an enabling environment for industry to increase productivity.

 

COMMENTS

WORDPRESS: 11
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    Such deflation is just as ominous as the Cotillion inflation zanu inflicted upon us early 2009

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    The problem is the rise and decline of inflation is meaningless if jobs are being lost and 90% of the population are unemployed and cannot afford to buy the products that are not going up in price. To recover the economy the most important players are those that are supposed to provide essential services i.e. Zesa, councils and more importantly government.As long as the attitude is that people must answer to the government and not vice versa Zimbabwe will remain in a limbo. What I fail to understand is that the haves cannot see that they would enjoy their gains in a thriving economy. I’m sure that this was the case in the early 80’s.

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    Shebah 8 years ago

    Some one report declining economy, Bit report sliding situation, someone sees doom, etc. Then this reporter report decline in inflation and decide to attribute it to liquidity problems – people getting less money to spend resulting in reduced prices?? What some economics

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    Mr Mixed Race 8 years ago

    Zimbabwe’s street economists.

    • comment-avatar

      That is what it’s all about mate. Peoples opinion.Exchange of views and Ideas good or bad. If you suggesting that we street economist should not put our opinions in this column then what is the point of having this in the first place.

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    Mr Mixed Race 8 years ago

    Agreed.

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    Boss MyAss 8 years ago

    Deflation is very bad for economic growth because it is very likely that consumers will postpone their purchases because they expect to have to pay less for them in the near future. In periods of deflation governments and central banks often seek to stimulate the economy, for example by lowering interest rates. Governments often strive for an inflation rate of around 2 to 3 percent per year. Such low inflation is beneficial for the economy. Low inflation encourages consumers to buy goods and services. Delaying will mean that they would have to pay more for the same product. Low inflation also makes it more appealing to borrow money, since interest rates are usually also low during periods of low inflation. Maintaining low inflation is therefore an important goal for governments and central banks because of the economic benefits. People like to complain about prices going up, but they often ignore the fact that wages should be rising as well. The question shouldn’t be whether inflation is rising, but whether it’s rising at a quicker pace than your wages.

    Inflation is a sign that an economy is growing. In some situations, little inflation (or even deflation) can be just as bad as high inflation. The lack of inflation may be an indication that the economy is weakening. As you can see, it’s not so easy to label inflation as either good or bad – it depends on the overall economy as well as your personal situation. The literal meaning of the word inflation is to blow up or get bigger. If the amount of money in a country – the money supply – grows faster than production in that country, the average price will rise as a result of the increased demand for goods and services. Inflation can also be caused by higher costs being charged on to the end-user. These might be raw material costs or production costs which have risen, but could also be higher tax rates. These price rises cause the value of money to fall. You can therefore buy less with the same amount of money. But this does not need to have an immediate effect on purchasing power. Purchasing power only declines if wages rises less rapidly than prices.

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    Sometimes when a house collapses down it is advisable to dig a new foundation and star the rebuilding process from foundation level using the correct materials.The power that be are trying to put bricks on a damaged foundation. That is why the house is likely to fall again. The aspiring business people can borrow money from the banks but if there are persistent power cuts, no water and bad roads they will be unable to operate and will struggle. That is why service are so important for the recovery.They are the foundation.

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    Mr Mixed Race 8 years ago

    Guys we can debate this issue forever as long as we do not rectify the causes of inflation which in my opinion is corruption .Jack The Rabbit says sometimes you have to start afresh to rebuild,the problem is that your material might be of high quality but corruption affects workmanship standards and your house falls again.Stop corruption then try to rebuild.This is what I want to see being done by our authorities.

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      I agree but the quality materials I talk about are those people in government and councils, a good example of quality is the mayor in the Midlands who refused the the Car.

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    msizeni silwelani 8 years ago

    We are not solely in control of the inflation behaviour. Goods considered in determining the CPI are normally imported from neighbouring countries. Banking trends also revolve on the “forex” sent home by the diaspora of which it tends to be uniform or following seasons back home.

    Let them make tariff regime changes as muted, a move i believe will have high impact on inflation. -illion percent inflation rate soon.