Inflation rose slightly in May, with the price of goods and services going up by an average of 0,75%, the highest it has been in more than three-and-a-half years, the Zimbabwe National Statistical Agency (ZimStat) revealed.
By Fidelity Mhlanga
In April, year-on-year inflation, measured by the all items Consumer Price Index (CPI) was 0,48%, meaning it gained by 0,27 percentage points.
Zimstat said year-on-year food and non-alcoholic beverages inflation, prone to transitory shocks, stood at 1,92 %, while the non-food inflation rate was 0,21 %.
The month-on-month inflation rate in May 2017 was 0,03% shedding 0,02 percentage points on the April 2017 rate of 0,05 %.
The month-on-month food and non-alcoholic beverages inflation rate was 0,07 % in May 2017, gaining 0,43 percentage points on the April 2017 rate of -0,36 %.
Economist, Clemence Machadu noted that the gain in inflation was largely driven by food items, forecasting that it will hit 2% at the beginning of September.
“Well, we haven’t had inflation as high as this in the past three-and-half years,” he said.
“It seems inflation is continuing to gain sharply, largely driven by the food inflation, which rose to 1,84 %.
“If inflation continues to make these substantial gains, I see it surpassing 1% by end of June and possibly rising to hit the 2% mark by the beginning of the fourth quarter.”
Zimbabwe first slipped out of deflation in February after year-on-year inflation for the month stood at 0,06% from the January figures of -0,65%.
“When you look at the main drivers, you will realise that bread and cereals contributed the most at 2,37%, followed by meat 1,84%, then we can also talk about vegetables 2,02%, and oils and fats, as well as fish and sea food,” he said.
Machadu said it appears that food inflation might continue gaining, reinforced by the government’s plans to implement the food fortification programme starting next month.
“As manufacturers now have to add more ingredients in the production of basic goods, by including the legislated micro-nutrients, it obviously translates to higher costs of production, which will be passed on to the consumer, which will fuel price increases,” Machadu said.
“Interestingly, when we look at top inflation risers, we also realise that liquid fuels have registered a sharp inflation rise of 17,06%, from 1,14% in April.
“And it’s ironic that this is happening at a time when the government has increased ethanol blending thresholds from 5 to 10%.”