- Inflation takes nasty turn in defiance of MPC and RBZ target
- Month on Month inflation came in at 26.59% in March 2020
- CPI for the month ending March 2020 stood at 810.40%
- Year on year inflation stood at 676.39%
Official Inflation came in at 26.59% in March 2020 gaining 13.07 percentage points on the February rate of 13.52% according to the latest report issued by ZimStat. Year on year inflation rate (annual percentage change) for the month of March 2020 as measured by all CPI stood at 676.39%.
The runaway inflation comes on the back of local currency that has shed more than 905 since its reintroduction and the launch of the Interbank Market System in February 2019. The interbank was to be replaced by the Reuters managed float system less than 8 weeks ago, before being abruptly suspended by the reintroduction by the multi-currency regime.
A lack of clarity where currency maters are concerned has come in the way of currency stability and influenced psychology. of pricing on the local market as pricing remains pegged against the greenback.
The CPI for the month ending March 2020 stood at 810.40% compared to 640.16% in February 2020 and 104.38 in March 2019
The government through Treasury projected a dip in monthly inflation to a single digit by the end of March 2020, a dream which has proved very much elusive as wheels come off the Zimbabwean economy.
Presenting the Monetary Policy Statement in the capital on Monday 17 February 2020, the RBZ governor Dr John Mangudya said the Central Bank expects month-on-month inflation to be under 5% by year-end.
The Central Bank also set a 50% annual inflation target by year-end. It remains to be seen the feasibility of such a prediction given the knock the economy is taking on the Corona Virus that has seen a 21-day lock-down enforced by the government putting normalcy of trade to a halt. At this point it is not clear if the lockdown will be extended as occurred in South Africa and Nigeria but the bottom line is, the economy will reel from the pandemic making it difficult for the fragile Zim economy to contain its supersonic inflation.
Although the monetary authorities expect inflation to fall, the pressure emanating from exchange rate loss is too high and therefore increases outlook uncertainty. In fact, it raises risk on the potential of negative inflation going forward.
Equity Axis projects annual inflation to peak to 841.1% by April 2020 and closes the year at 364%.
Also fuelling the gloomy inflation outlook are projected drought, government stimulus spending, increased money supply following government’s decision to inject more notes in the economy, rising foreign debt, continued electricity shortages and currency depreciation.
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