ZiG prices unchanged in June, tallies RBZ forecast

Zimbabwe’s June inflation numbers paint an encouraging picture of Zimbabwe’s rapidly stabilising economy after monthly inflation remains unchanged, suggesting bright prospects for inflation and exchange rate stability.

The month-on-month inflation rate for the ZiG Consumer Price Index (CPI) for June came in at 0,0 percent, according to the latest Zimbabwe National Statistics Agency (ZimStat) report.

This indicates that, on average, prices remained unchanged between May 2024 and June 2024.

The ZiG inflation rate’s stability suggests a period of economic equilibrium, with no significant upward or downward pressure on prices during this period.

ZimStat noted, “The ZiG CPI for June 2024 showed no month-on-month change, marking a stable economic environment for consumers and businesses alike.”

A closer look at the ZiG CPI components reveals that the Food and Non-Alcoholic Beverages category had the lowest contribution to the month-on-month change, with a slight deflation of -0,1 percent.

Alcoholic beverages and tobacco monthly inflation also saw a marginal decline of -0,02 percent.

The stability in the ZiG inflation rate is a positive indicator for households, as their purchasing power remains largely unaffected by inflationary pressures.

The central bank, following its latest Monetary Policy Committee meeting, said the stabilisation measures implemented by the bank since the beginning of April 2024 had already shown significant positive results.

According to the committee, they expected June inflation rate to be around 0 percent, driven by declines in both food and non-food inflation.

“The measures we have taken are yielding the desired results, with inflation coming under control faster than anticipated,” the central bank said.

Looking ahead, inflation pressures are expected to remain subdued during the outlook period, with projected inflation to end the year below 5 percent.

This optimistic forecast is underpinned by the stability of the exchange rate, which has been a critical factor in managing inflation.

“We are committed to ensuring that the growth in money supply remains consistent with our pro-growth inflation targets,” the central emphasised, reinforcing its strategy to maintain economic stability.

In contrast, the US dollar inflation rate for June 2024 exhibited a deflationary trend.

The month-on-month inflation rate was -0,3 percent, a decrease from the 0,1 percent recorded in May 2024. This reduction highlights a general decline in price levels when measured in US dollars, which could be attributed to various factors, including exchange rate dynamics and import price adjustments.

ZimStat stated, “The USD CPI’s month-on-month deflation reflects a broader trend of decreasing prices, which may benefit consumers but also signals underlying economic challenges.”

Year-on-year, the USD inflation rate stood at 3,8 percent, indicating that prices in June 2024 were 3.8 percent higher than in June 2023.

This annual increase suggests a longer-term inflationary trend despite the month-on-month deflation. Within the USD CPI, the Food and Non-Alcoholic Beverages category had a -0.2 percent contribution to the month-on-month change, while Alcoholic Beverages and Tobacco contributed -0.02 percent, consistent with the broader deflationary movement.

The Weighted inflation rate, which aggregates multiple indices for a comprehensive view, also showed deflation.

The month-on-month rate for June 2024 was -0,2 percent, an improvement from the -0.6 percent recorded in May 2024.

This weighted measure’s slight gain indicates a reduction in deflationary pressures compared to the previous month.

ZimStat commented, “The Weighted CPI’s movement towards less deflation underscores a gradual stabilization in price levels across various economic sectors.”

Food and Non-Alcoholic Beverages had the lowest contribution to the month-on-month change in the Weighted CPI at -0,18 percent, followed by Alcoholic Beverages and Tobacco at -0,03 percent.

These figures align with the observed trends in both the ZiG and USD indices, highlighting the significant impact of essential goods on overall inflation dynamics.

June 2024 inflation statistics paint a picture of economic stability in local currency terms, alongside deflationary trends when measured in USD and a slight easing of deflationary pressures in the weighted measure.

ZimStat commented, “The diverse inflation measures underscore the complexity of Zimbabwe’s economic landscape, necessitating nuanced policy responses to sustain growth and stability.”-chroncile