Annual inflation in Zimbabwe rose by 3.5% in USD terms during May, as per the Zimbabwe National Statistics Agency’s (Zimstat), first data for the new ZiG currency.

Zimstat now offers three distinct inflation metrics: one in US Dollars, another in ZiG, and a weighted average that factors in price fluctuations in both USD and the domestic currency, NewZwire reports. 

In May, the year-on-year inflation rate in USD was 3.5%, with a month-on-month inflation of 0.1%, marking a decline of 0.7 percentage points from April.

In ZiG terms, May 2024 saw inflation at -2.4%, indicating price shifts since ZiG's inception in April.

The annual ZiG inflation data will be accessible next April, enabling a year-on-year assessment.

The weighted month-on-month inflation rate, which considers price fluctuations in both ZiG and USD, stood at -0.6%, The Zimbabwe Mail reports.

Zimstat noted that inflation in USD during May was mainly influenced by the prices of food and non-alcoholic beverages, followed by furniture and equipment. Transport costs emerged as the leading factor contributing to the weighted monthly inflation.

Zimbabwe implemented ZiG on 5th April as a replacement for the severely devalued Zimbabwe Dollar, aiming to combat rampant inflation. 

The central bank has maintained strict control over the circulation of ZiG to curb inflation. However, this measure has inadvertently led to increased costs for certain services, particularly those reliant on the local currency for small transactions, such as transportation.

The Reserve Bank of Zimbabwe (RBZ) reports that over 80% of economic transactions are now carried out in USD. This transition is primarily attributed to the widespread rejection of the Zimbabwe Dollar by the market. 

In addition, the central bank’s rigorous control over the money supply, coupled with the maintenance of high interest rates, has further incentivised the preference for conducting transactions in USD.