January Inflation Hits 10,75pc

The month on month inflation rate in January 2019 was 10,75 percent gaining 1,72 percentage points on the December 2018 rate of 9,03 percent.

This means that prices of goods and services as measured by the all items CPI increased by an average rate of 10,75 percent from December 2018 to January 2019.

This gave an annual rate of inflation of 56,90 percent at the end of January up from the December 2018 figure of 42,09 percent, but the annual rate includes the large discontinuous jump of October last year with higher than normal monthly rates for the next three months.

Annual inflation will drop drastically in October 2019, when disparity between annual indices for the corresponding periods contract as the largest single monthly jump is suddenly eliminated.

Annual inflation shot up in October last year on market perception that a Reserve Bank directive for separation of nostro and real time gross settlement (RTGS) accounts meant a shift from 1-1 exchange policy for official forex allocations for basic imports.

The Zimbabwe National Statistics Agency (Zimstat) said the latest inflation rate mean prices-as measured by the Consumer Price Index (CPI)-were adjusted up by an average of 56,90 percent in the 12 months to January 2018.

Food and non-beverages products, which carry a 33,53 percent weight in consumer prices index, experienced some of the biggest price increases in the period under review; the index rose to 159 from 148,69.

Housing, water, electricity and gas-which have the second biggest weight at 17,74 percent, recorded slight increases in prices after the index rose to 110,96 from 106,33.

Some of the price jumps in the last four months have been caused by suppliers having to buy some inputs at parallel rates, but other price hikes have been caused by those who price their final product at the parallel rate even though many inputs and costs are not in forex.

While raw materials and some products sold on the domestic market are imported, the US dollar is arguably not the only input cost, neither is it the biggest cost in a number of products that have seen wild price increases. Further, even those charging in US dollars are charging exorbitant prices.

Traders have also ignored mechanisms put in place by Government in the form of the fuel excise duty rebate to prevent the cost push effect of the price of fuel following adjustments to eliminate arbitrage.

Source : The Herald

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