Government misses 10% year end inflation target

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  • December 2019 monthly inflation stood at 16.55%
  • Mthuli Ncube had projected that the country would end the year with an inflation rate of 10% on account of ongoing fiscal and monetary policy reforms
  • Equity Axis’ calculations based on ZIMSTAT figures show that annual inflation rate in December 2019 stood at 521.16% up from 440.01% recorded in November 2019
  • Government in the 2020 National Budget projects single digit inflation by year end.

Government’s end of year monthly inflation target of 10% for 2019 was missed by a considerable margin hitting 16.55% as at December 2019, latest figures from the Zimbabwe National Statistics Agency (ZIMSTAT) shows.

The December rate is 0.91 percentage points lower than 17.46% which was recorded in the previous month, November 2019.

“This means that prices as measured by the all items CPI increased by an average rate of 16.55 percent from November 2019 to December 2019,” ZIMSTAT said.

Finance Minister Professor Mthuli Ncube had projected that the country would end the year with an inflation rate of 10% on account of ongoing fiscal and monetary policy reforms.

Meanwhile, government in the 2020 National Budget projects single digit inflation by year end. The Monetary Policy Committee (MPC) of the central bank kept the policy rate at 35% in the last meeting in November 2018, on projections that monthly inflation for November 2019 is set to decline further.

Some economists have dismissed government’s inflation projections as being out of touch with reality cognisant of developments in the economy bleeding from a myriad of challenges including shortages of foreign exchange, drought, persisting fuel supply gaps and power cuts.

According to ZIMSTAT, the month on month Food and Non Alcoholic Beverages inflation rate stood at 15.75 percent in December 2019, shedding 6.88 percentage points on the November 2019 rate of 22.63 percent.

The month on month non-food inflation rate stood at 17.14 percent, gaining 3.20 percentage points on the November 2019 rate of 13.94 percent.

“The CPI for the month ending December 2019 stood at 551.63 compared to 473.28 in November 2019,” ZIMSTAT said.

Government suspended publication of annual inflation numbers until February 2020 to enable ZIMSTAT to collect more data to compare the price statistics on a like-to-like basis following the currency changes.

However, the move has been criticised as hypocrisy and a desperate attempt to hide from the public the rate at which the economy was free falling.

Prominent American Economist, Professor Steve Hanke who has constantly criticised Ncube’s inflation rates as understatements claimed in October 2019 that Zimbabwe’s inflation stood at 591% whilst suggesting that the country must dollarize to bring back much needed economic stability.

Equity Axis’ calculations based on ZIMSTAT figures show that annual inflation rate in December 2019 stood at 521.16% up from 440.01% recorded in November 2019.

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