Inflation starting to creep up

Prices of goods and services crept up for the second consecutive month with the month-on-month inflation for October 2023 coming out at 2,5 percent up from 1 percent in September 2023.

The Consumer Prices Index (CPI) for October stood at 103,44 while that for September stood at 100,95.

Year-on-year inflation, however, slowed to 17,8 percent from 18,4 percent.

Food and non-alcoholic beverages year-on-year inflation came out at 23,5 percent while that of non-food came out at 15, 4 percent.

Prices of clothing and footwear with year-on-year inflation at 1,3 percent have remained relatively stable as the sector continues to face stiff competition from cheap imports sold in boutiques and malls across the country.

The CPI for October 2022 stood at 87,79 while that for 2023 stood at 103,44.

Prices of housing, water, electricity, gas and other fuels went up the most with month-on-month inflation at 5 percent, the highest among categories.

This category is likely to remain elevated next month following an 18,8 percent electricity tariff increase announced by ZERA this week.

Food and non-alcoholic beverages had month-on-month inflation at 2,4 percent while non-food inflation had month-on-month inflation at 2,5 percent.

The cost of education and that of communication however came off with month-on-month inflation at -4,2 percent and -2,7 percent respectively.

Communication inflation is likely to go up next month after internet service providers announced tariff increases this week.

Communication inflation is already the highest year-on-year at 42,1 percent and this is before the latest tariff hike of more than 100 percent.

Business Weekly’s outlook

Business Weekly’s analysts predict weakening inflation in the next few months as the latest Monetary Policy Committee (MPC) resolutions are implemented.

The MPC recommended that the limit of 10 percent trading margin above the interbank rate be removed.

“If implemented, the move is likely to see US Dollar prices of goods and services in the formal sector coming off.”

The MPC also recommended that Government consider removing the Intermediated Money Transfer Tax (IMTT) on transactions that are intermediated through plastic bank cards and other digital platforms.

“This recommendation is likely to be implemented through a statutory instrument, amid rumour that a tax on cash withdrawals will be announced.”

However, the removal of IMTT will lower the cost of doing business and inflation.-ebusinessweekly