Unsurprisingly, the latest ZIMSTAT inflation data for May 2022 revealed a return to three-digit headline inflation last seen in June 2021. Coming in at 131.74%, inflation was up from the 96.34% recorded a month earlier. In terms of monthly changes, the local consumer price index (CPI) jumped from 15.55% to 20.97%. Notably, the leading CPI changes are based on ZWL pricing which is inherently weakened by a regularly depreciating currency.

For comparison, ZIMSTAT’s blended inflation data factor’s in Zimbabwe’s dual currency price system. Blended headline inflation slid from 40.99% to 50.53% while month-on-month figures declined from 9.63% down to 8.68% between April and May this year.

May's top five inflation drivers

Taking a closer look at the country’s composite basket of consumer goods, May’s top five inflation drivers were:

Food and non-alcoholic beverages
with a 25.95% price increase fuelled by pricing spikes in oils and fats, meat as well as bread and cheese;

Clothing & footwear
which on average became 24.96% more expensive, primarily from clothing material, accessory and repair cost increases;

Miscellaneous goods

such as electrical appliances for personal care and personal grooming establishments such as hair salon services which on average became 24.07% more expensive in the period under review;

with its 22.21% general price level increase that falls in line with recent fuel price increases announced by ZERA;

which on average became 21.21% more expensive as paramedical and hospital expenses shot-up between April and May this year.

Hunger on the horizon 

As a basic necessity all income brackets, formal and informal sectors consume, food pricing comes as one of Zimbabwe’s most sensitive inflation components. Even before geo-political developments in Europe became a topical issue, alarm bells had rung in the local agriculture sector following an unreliable spell of rainfall during the 2021/2022 summer cropping season – a period associated with Zimbabwe’s main staple grain production.

Despite 2020/2021 reports of grain production adequacy in Zimbabwe and resultant expectations of grain reserve support to kick-in during the 2021/2022 period, national government:

  • Reversed a maize import ban;
  • Permitted import tariff reductions to a range of basic commodities such as maize meal and
  • Through the Grain Millers Association of Zimbabwe reportedly secured 400k tonnes of white maize from Zambia and Malawi to stave-off growing food security concerns.

The implications of grain supply challenges have started reflecting in CPI’s monthly food component.

Looking ahead, as Ukraine approaches its September wheat harvest phase,  global supplies may or may not be relieved depending on exporters’ access to external transport networks via road and sea ports. Considering Zimbabwe’s need for imported wheat to blend with domestic stocks in bread and other cereal product manufacturing, this international development could swing Zimbabwe’s food inflation in any direction.

With May 2022’s total consumption poverty line up from the ZWL11,363.46 recorded in April to ZWL14,041.38, the timing of state intervention can be viewed as a timely one in the context of general welfare support and maintenance of civil order in the run-up to 2023 presidential elections.

Currency market chaos

The rush for US$ cash continues amid current and anticipated:

  • ZWL pricing instability concerns,
  • Low confidence in the local currency as a store of value and
  • Heightened fears of further overnight economic policy shifts.

Additionally, launch of a “willing buyer-willing seller” platform for formal market currency exchange added to price system instability due to the platform’s regulated position as a price benchmark for certain goods and services traded in Zimbabwe. This exchange rate’s freedom to fluctuate according to willing sellers’ daily positions in turn has the potential to drive prices up daily.

As a result, some aspects of Zimbabwe’s inflationary developments will continue to be influenced by currency market volatility.

Considering the underlying political elements that are driving currency market turbulence, no favourable outcomes should be expected anytime soon. Therefore, inflation is likely to continue edging higher in the months ahead.