• Inflation rates dropped significantly  with month-on-month rates falling to 0.5% and 0.2%
• Year-on-year inflation for the USD rose to 15.1%,  despite the  month-on-month relief
• Zambia, Mozambique experiencing higher annual rates, while South Africa maintains relative stability

Harare- Zimbabwe’s inflation landscape brightened in February 2025, with month-on-month rates for both its gold-backed ZiG currency and the U.S. dollar plummeting to their lowest levels in months, according to the Zimbabwe National Statistics Agency (Zimstat).

The ZiG month-on-month inflation rate softened to 0.5%, down from a steep 10.5% in January 2025, while the USD-based rate dropped dramatically to 0.2% from 11.5%.

This sharp decline signals a potential turning point for an economy long battered by currency instability and hyperinflationary ghosts.

Yet, as Zimbabwe savours this respite, how does its progress stack up against regional peers, South Africa, Zambia, Mozambique, Botswana and its own tumultuous past?

Zimstat’s data paints a picture of broad-based price stabilisation. In ZiG terms, the month-on-month inflation rate for Food and Non-Alcoholic Beverages fell to 0.8% in February 2025, shedding 6.0 percentage points from January’s 6.8%.

Non-food inflation in ZiG terms was even more subdued at 0.3%, down 4.3 points from 4.6% the prior month.

On the USD front, Food and Non-Alcoholic Beverages in USD terms mirrored inflation  trend, slipping to 0.2% from 16.8% (a 16.6-point decline), while non-food items also eased to 0.2% from 9.1% (down 8.9 points).

Year-on-year, however, the USD inflation rate tells a cautionary tale, climbing to 15.1% in February 2025, an uptick from January’s 14.6%. This suggests that while monthly pressures have eased, annual price increases remain elevated, reflecting deeper structural issues tied to currency volatility and import reliance.

Still, the month-on-month slowdown is a welcome shift for a nation accustomed to unrelenting price spirals.

Historical Context: From Hyperinflation to Hope

Zimbabwe’s inflation history is a rollercoaster of despair and tentative recovery. The hyperinflation crisis of 2007-2009 saw monthly rates peak above 100 billion percent in November 2008, with year-on-year figures reaching an unimaginable 89.7 sextillion percent, rendering the Zimbabwean dollar  worthless.

Dollarization in 2009 tamed the beast, bringing stability as the USD became the de facto currency, with inflation dropping to single digits by 2013.

The reintroduction of the Real-Time Gross Settlement (RTGS) dollar in 2019, however, reignited chaos, with annual inflation soaring to 676% by March 2020 and 737% by July of that year.

The ZiG, launched in April 2024 as a gold-backed currency, aimed to restore trust, but its debut was rocky, depreciating 36% in its first month on the parallel market.

October 2024 saw a 37.2% month-on-month spike in ZiG terms after a devaluation of 43% in September, reflecting its fragility.

Against this backdrop, February 2025’s cooling rates of 0.5% for ZiG and 0.2% for USD mark a rare moment of calm, hinting at tighter monetary controls or a temporary lull in external shocks like the El Niño drought that has spiked maize imports.

Regional Comparison: Zimbabwe in Context

Zambia’s annual inflation soared to 16.8% in February 2025, the highest since November 2021, edging up from 16.7% in January. A prolonged El Niño-induced drought, mirroring Zimbabwe’s maize import spike, pushed food inflation to 20.6% from 19.2%, while non-food inflation eased to 11.7% from 13.2%.

Month-on-month, consumer prices rose 2.4%, accelerating from January’s 2.1%, as the kwacha’s weakness amplified import costs. Zambia’s 16.8% annual rate overshadows Zimbabwe’s 15.1%, and its monthly 2.4% far exceeds Zimbabwe’s 0.2% (USD) and 0.5% (ZiG), highlighting a sharper drought impact and currency strain.

South Africa’s inflation rose to 3.2% year-on-year in January 2025, the highest in four months and the third consecutive monthly increase, yet it fell slightly below the forecasted 3.3%. This remains well under the South African Reserve Bank’s (SARB) 4.5% target midpoint within its 3-6% range.

The rand’s stability and a robust regulatory framework keep South Africa’s inflation far below Zimbabwe’s annual 15.1%.

Meanwhile, Mozambique’s annual inflation rate climbed to 4.69%, a one-year high, up from 4.15% in December, marking its fourth consecutive month of increase, driven largely by escalating food prices.

Compared to Zimbabwe, where February 2025 saw month-on-month inflation drop sharply to 0.5% for ZiG and 0.2% for USD (from 10.5% and 11.5% in January), Mozambique’s steady annual rise contrasts with Zimbabwe’s monthly relief, though Zimbabwe’s year-on-year USD rate of 15.1% dwarfs Mozambique’s 4.69%.

While Mozambique’s metical stability and gradual food-driven inflation reflect manageable pressures, Zimbabwe’s dual-currency volatility and higher annual rate despite its February respite highlight a more precarious economic footing, exacerbated by drought-induced maize imports and a fragile ZiG, against Mozambique’s more consistent trajectory.

Botswana’s annual inflation rate surged to 2.5% in January 2025, the highest since August 2024, up from 1.7% in the prior two months. While Botswana’s pula stability and modest food price pressures (5.1% vs. Zimbabwe’s drought-driven maize import spike) ensure a controlled ascent, Zimbabwe’s sharper monthly relief masks deeper yearly volatility.

Analysis: Relief, Risks, and Regional Lessons

Zimbabwe’s February 2025 inflation drop is a triumph of sorts. The plunge from 10.5% to 0.5% in ZiG terms and 11.5% to 0.2% in USD terms suggests a respite from the relentless price surges that have defined its recent past. Food inflation’s sharp decline 6.8% to 0.8% in ZiG, 16.8% to 0.2% in USD may reflect seasonal harvests or reduced import pressures post-January, though the $75 million maize import bill (outpacing diesel’s $68 million) hints at drought-related vulnerabilities. Non-food items’ stabilization (0.3% ZiG, 0.2% USD) could stem from tighter supply chains or a stronger ZiG peg.

Compared to South Africa’s creeping 3.2%, Zambia’s drought-hit pressures, Mozambique’s steady 4-5%, and Botswana’s reliable 4.2%, Zimbabwe’s monthly gains outshine its peers, yet its 15.1% annual USD rate exposes a fragility they avoid. South Africa’s rand, Botswana’s pula, and Mozambique’s metical benefit from consistent monetary policies and less reliance on dual-currency systems luxuries Zimbabwe lacks amid its ZiG-USD juggling act.

Zambia’s diversification beyond copper offers a lesson: Zimbabwe’s gold export boom (slashing the trade deficit 51% to $96 million in January) is a lifeline, but over-reliance on mining and agriculture leaves it exposed to climate shocks like El Niño.

Historically, Zimbabwe’s hyperinflation scars warn against complacency. The ZiG’s early stumbles echo the RTGS dollar’s collapse, and while February’s figures inspire hope, the 15.1% yearly rate and USD scarcity signal persistent risks. Suppliers’ USD preference fuels informal markets, a challenge South Africa curbs with licensed supply chains, a model Zimbabwe could adapt if enforcement capacity improves.

Therefore, Zimbabwe’s inflation cooldown offers a glimmer of stability, outpacing the monthly struggles of regional peers while trailing their annual consistency. Against its hyperinflationary past, this is progress, driven by gold exports and perhaps fleeting policy wins.