• Zimbabwe's ZiG inflation rate dropped to -0.1% in March 2025
  • USD inflation in Zimbabwe remained steady at 15% year-on-year
  • Southern Africa's inflation trends vary, with South Africa, Mozambique, and Botswana showing relative stability

Harare- Latest inflation dynamics in Southern Africa in 2025 reveal a region of contrasts, with Zimbabwe’s dual-currency system standing out as a focal point of economic complexity.

Zimbabwe’s ZiG month-on-month inflation rate plunged to -0.1% in March 2025, down from 0.5% in February, shedding 0.6 percentage points and marking a rare deflationary shift.

This decline was propelled by a steep -0.5% month-on-month rate in the Food and Non-Alcoholic Beverages category, a 1.3-point drop from February’s 0.8%, while non-food inflation moderated to 0.2% from 0.3%.

ZiG’s deflation stems not from organic market relief but from tight liquidity, as the government engages in deliberate strategies including delaying payments to suppliers, a hide-and-seek tactic aimed at cushioning the ZiG’s performance.

This artificial suppression of liquidity has curbed price growth in ZiG terms, though it masks underlying pressures

In USD terms, Zimbabwe’s inflation tells a different story: a month-on-month rate of 0.1% in March (down 0.1 points from February’s 0.2%), with the USD CPI edging up from 121.73 to 121.87.

The USD year-on-year rate soared to 15.0%, up from March 2024 reflecting sustained annual price escalation.

Taxes on fast food, sugar tax , and high maize import costs drove up imported USD inflation.

South Africa, by contrast, offers a steadier profile, with a month-on-month inflation rate of 0.3% in February 2025 and an annual rate of 3.2%, likely stable into March.

Within the South African Reserve Bank’s 3-6% target, this reflects resilience despite food inflation pressures above 4.5%, fueled by global commodity prices and domestic supply shocks like drought. Fuel costs and administered price increases (e.g., electricity) add to the mix, though March 2025’s moderation stands apart from Zimbabwe’s manipulated ZiG dynamics, highlighting South Africa’s reliance on market-driven stability over government intervention.

Zambia’s inflation offers a nuanced shift within the region’s spectrum. Its annual inflation rate eased to 16.5% in March 2025, down from 16.8% in February, the steepest rate since November 2021 marking the first slowdown since June 2023.

This moderation was propelled by favourable rains, which tempered food price increases to 18.9% from 20.6% in February.

However, non-food inflation accelerated to 13.2% from 11.7%, reflecting persistent pressures from fuel costs (USD 1.36 per liter) and currency depreciation.

On a monthly basis, consumer prices rose by 1%, a significant slowdown from February’s 2.4% surge. Zambia’s trajectory contrasts with Zimbabwe’s ZiG deflation, highlighting a reliance on natural factors like rainfall rather than policy-driven liquidity curbs, though its high annual rate aligns it closer to Zimbabwe’s USD inflation than South Africa’s stability.

Mozambique’s inflation appears to be easing, with an annual rate potentially at 8-9% by March 2025, down from 9.78% in January 2023, and month-on-month rates at 0.2-0.4%. Food inflation, driven by imports and fuel costs (USD 1.36 per liter), is softening, aided by global commodity trends, though taxes and transport costs linger.

Botswana remains a low-inflation standout, with an annual rate of 3-4% in February 2025 and month-on-month increases below 0.5%, likely holding into March. Stable food prices, lower fuel costs (USD 1.31 per liter), and minimal import reliance insulate it from regional pressure.

Malawi, at the region’s inflationary extreme, will likely see annual rates above 20% in March 2025, with month-on-month figures at 1-2%, building on February 2023’s 31.7% food inflation. Maize imports, fuel costs, and currency depreciation drive this surge, unbuffered by interventions like Zimbabwe’s payment delays, leaving Malawi acutely vulnerable.

Zimbabwe’s dual-currency narrative dominates the regional analysis. The ZiG’s -0.1% month-on-month deflation, engineered through tight liquidity and delayed supplier payments, contrasts with its USD 15.0% year-on-year inflation, exposing a fragile balancing act.

Food inflation, tied to maize and fuel, unites the region, but Zimbabwe’s ZiG manipulation unlike its neighbours’ market-driven trends, raises sustainability concerns as suppliers bear the cost of this fiscal sleight of hand.

March 2025 thus frames Zimbabwe as a precarious outlier in a region wrestling with both structural and policy-driven inflationary forces.

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