Inflation Surge: ZWG and USD Experience Sharp Monthly Increases

HARARE – Monthly inflation accelerated in both currencies in January driven by pricing pressures in both food and non food categories. According to data from Zimstat, ZWG month on month inflation was recorded at 10.5%, a 6.8 percentage point increase from the December rate of 3.7% while USD inflation rose to a staggering 11.5% from 0.6%.

Despite the stability of the exchange rate since September, attributed to the tight monetary policy adopted by the Reserve Bank of Zimbabwe, the economy is experiencing a rise in cost-push inflation. This means that external factors, such as increased production costs, are driving prices higher, affecting consumers significantly.

The situation showcases the interconnectedness of market pressures, where even a stable exchange rate cannot mitigate the effects of escalating costs in both food and non-food sectors.

According to the latest report, the overall index for ZWG Food and Non-Alcoholic Beverages climbed from 189.66 in December 2024 to an alarming 202.65 in January 2025, reflecting a substantial rise of 6.8%. This increase is indicative of broader economic pressures, including fluctuating supply chain dynamics.

Among the categories witnessing rampant price hikes, Fruit stood out with a staggering 11.3% increase. Experts attribute this surge to a combination of heightened demand and potential supply constraints, which have compelled retailers to adjust their pricing strategies. Similarly, the Fish and Seafood category recorded an increase of 4.5%.

Meat prices mirrored these trends, with consumers facing increasingly steep costs when purchasing this staple protein, suggesting that factors such as production costs, feed prices, and market demand are coalescing to drive up pricing across this crucial category. Other significant changes were noted in bread and cereals, which are seeing consistent price increases, further squeezing household budgets.

The non-food inflation rate exhibited an even sharper increase, reaching 12.5% in January 2025. This marks a staggering gain of 9.3 percentage points over the 3.2% rate observed in December 2024, indicating heightened price pressures across various sectors.

In US dollar terms, the month-on-month inflation rate for Food and Non-Alcoholic Beverages was particularly striking, soaring to 16.8% in January 2025. This rate represents an increase of 14.9 percentage points from 1.9% in December 2024.

Additionally, non-food inflation recorded a rise to 9.1% in January 2025, gaining 9.1 percentage points from a rate of 0.0% in the previous month, which further underscores the escalation in consumer prices.

Moreover, year-on-year comparisons reflect an annual inflation rate of 14.6% for January 2025, calculated from the index of 105.98 in January 2024 to the current 121.43. This 14.6% increase illustrates how much purchasing power has been diminished over the past year.

Overall, the mean month-on-month USD inflation rate for January 2025 stands at 11.5%, a clear indicator of the current economic challenges that households are facing due to rising prices.

USD Monthly inflation

The weighted month-on-month inflation rate was 11.6% gaining 10.5 percentage points on the December rate of 1.1%. Zimstat said it was still using the currency ration of 20% ZWG and 80% US dollars, although according to the Reserve Bank of Zimbabwe, the trading currency mix had gone just over 93% USD and 7% ZWG in the last quarter. Finance Minister Mthuli Ncube recently told FinX that the ratio was at 15% ZWG and 85% USD.

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