Reserve Bank of Zimbabwe (RBZ) governor John Mangudya says inflation is likely to stabilise around 7% in the medium term.
BY MTHANDAZO NYONI
Giving his presentation during the pre-budget seminar in Bulawayo last week, Mangudya said Zimbabwe’s annual inflation rate at 5,4% in September 2018 was still within Southern African Development Community’s inflation target range of 3-7% and comparable to regional peers.
“RBZ is committed to contain inflation within growth-enhancing levels of 3% to 7% band, a necessary and sufficient condition to preserve purchasing power; foster wage stability, and reduce demand for wage increases,” Mangudya said.
“While inflation may go over the 7% mark, it is expected to revert to below 7% in the short to medium-term. Annual inflation rose to 5,4% in September 2018, from 4,8% in August 2018,” he said.
Mangudya said some retailers were engaging in speculative pricing, with prices benchmarked to parallel market rates even if no trades had occurred.
He said the central bank had come up with measures to preserve value and cushion investors and the banking public, including offshore finance facilities to support the financing of critical imports such as fuel, wheat, cooking oil, packaging using real time gross settlement balances.
“This is critical to preserve value, increase domestic production and improve confidence,” he said.
Mangudya said the economy was about production, productivity and export of goods and services.
“Money is only a medium of exchange. It needs to be supported by production to preserve its value,” he said.