Zim inflation takes a turn: Local currency sees deflation

The Zimbabwe National Statistical Agency (ZimStats) released inflation figures for May 2024 this morning, revealing a mixed bag of news for consumers. While inflation measured in US dollars saw a slight slowdown, the local Zimbabwe dollar (ZiG) experienced deflation.

Official US dollar inflation stood at 0.1 percent in May, a significant drop from 0.8 percent recorded in April. This translates to a 0.7 percentage point decrease, suggesting a potential slowdown in price increases for goods and services priced in US dollars. However, it’s important to note that this is still a positive inflation rate, indicating a very gradual rise in prices.

Looking at the year-on-year picture, the US dollar inflation rate sits at 3.5 percent. This relatively low number offers some relief compared to Zimbabwe’s history of hyperinflation.

Digging deeper into the data, the ZimStats report reveals that the US dollar Consumer Price Index (CPI) for food and non-alcoholic beverages contributed most significantly to the monthly inflation rate, pushing prices up by 0.04 percent. Furniture and equipment followed with a 0.02 percent contribution.

Prices in local currency experiences deflation

In contrast to the US dollar, the month-on-month inflation rate for the local currency (ZiG) was negative at -2.4 percent. This indicates that, on average, prices of goods and services denominated in ZiG actually decreased in May compared to April.

The category with the most significant downward pressure on ZiG prices was food and non-alcoholic beverages, with a -1.7 percent contribution. Alcoholic beverages and tobacco followed with a -0.3 percent contribution.

Cost of Living Indicators

ZimStat also released the Food Poverty Line (FPL) and the Total Consumption Poverty Line (TCPL) for May 2024. These indicators estimate the minimum amount of money needed to meet basic needs (FPL) and a more comfortable standard of living (TCPL) for one person. In May, the FPL stood at ZiG401.36, while the TCPL was ZiG624.44.-ebusinessweekly