Zimbabwe’s inflation continued to move up in November, with annual and monthly rates rising due to increasing accommodation, water, electricity and fuel costs.
The country’s annual inflation hit 21.6% this month compared to 17.8% in October, whilst the monthly inflation rose to 4.5% from 2.5%, according to the Zimbabwe National Statistics Agency (ZIMSTAT), exceeding the central bank’s target of 3% for this year.
“For November 2023, the Consumer Price Index for housing, water, electricity, gas and other fuels contributed the most to the month-on-month change in the inflation rate, followed by food and non-alcoholic beverages,” ZIMSTAT stated.
Zimbabwe made a recent shift from using arithmetic aggregation to geometric aggregation to calculate weighted price indices. Having come into effect in September, there has since been a significant decline in annual inflation from 77.2% in August to 18.4% in September.
The new methodology merges price changes of goods and services in the US Dollar and Zimbabwean Dollar, the statistics agency went on to say.
The current trends highlight the economy’s level of dollarisation and increase the need to boost confidence, says economist Persistence Gwanyanya.
“The use of US$ has gone up to a level of 80% with most of the transactions being undertaken in un US$ which have been very stable. Whilst the ZWL prices have gone up, the impact remains quite insignificant.
“Going forward the ZWL depreciation will be well managed depending on the foreign currency situation which has been complicated by the market’s insatiable appetite to preserve value.”
He added. “The tight monetary policy stance remains in force but there is also a need to put in place mechanisms which will lead to the improvement of the economy’s liquidity situation.”
Shortly after the shift in methodology, the Reserve Bank of Zimbabwe’s monetary policy committee slashed the benchmark interest rate to 130% from 150%, yielding its position of having the highest interest rate in the world to Argentina, Bloomberg reports.