- YOY inflation decreases to 229.8% from 243.8%
- MOM inflation decreases to 1.1% from 2.4%
- MOM exchangerate records new low depriciation losing 12% of its value
Inflation hits a new low, marking an unnoticed impact as the exchange rate is racing to lose its total value. The latest recorded inflation rate is 229.8% YOY and 1.1% MOM according to the national statistics agency, Zimstat. This had the economic players mark a success by pegging 14 and 2.4 percentage points decreases for YOY and MOM against the Dec 2022 records.
The disinflation however came into effect after the local currency has lost at least 12% of its value in the first month of the year 2023, a highest low-record of month on month since 2019. The unattended sky-rocketing exchange rate is most likely to pull back the inflation to its religious statuses.
The government has maintained a tight monetary stance for the past seven months to chase away inflation. This has however recorded success with a substantial opportunity cost as it has propelled much participation of black-market operations with companies having to take the arbitrage opportunity to counter the financial impact of the contractionary policies. This has taken effect as high volumes of USD transactions are being sent for parallel market conversion, benefiting from at least a 30% higher premium than usual.
The Zimbabwean situation has been always more of exchange rate worries more than inflation demon. This is because the high volumes of the national transactions are cantered on USD transactions which necessitate the conversation of locally thriving currency into a more stable medium of exchange measure.
The curbing of inflation however is a running in circles hide and seek which will strain the economy left, right and centre with national development being sacrificed to a no end game. The latest exchange rate movements necessitate a different approach to solve the national problem which could be initiated by trying to have a stable external value movement of a currency
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