Zim July inflation rises to 4.29%, highest since 2012

Zimbabwe’s inflation rate sped up by 1.38 percentage points to 4.29 percent in July, latest official data shows, the highest level in over six years.

The July 2018 figure is the highest inflation rate since February 2012, when it stood at 4.3 percent.

Month-on-month, inflation in July this year rose 1.03 percentage points to 0.98 percent, national stats agency Zimstats said in its report released Wednesday.

The 1.38 percentage point rise comes after months of flat movements in the inflation rate. Inflation rose by 0.03 percentage points in April, remained constant in May, before going up a marginal 0.2 percentage points in June.

A separate report this week, by the Consumer Council of Zimbabwe, showed that the family shopping basket was up by $6.99 to $598.04 in July 2018, driven mostly by higher fuel costs and an expected hike in civil servant salaries.

Government recently awarded its workers a 17 percent pay hike, after facing a damaging strike by public health workers. This is seen driving up Government’s wage bill and overall expenditure.

Government spending outpaced revenue by $225 million in the first quarter of 2018, up from $183 million last year.

The Mnangagwa administration says it is targeting a $700 million budget deficit this year, after overspending by $2.5 billion in 2017, the equivalent of 14 percent of gross domestic product. Government spent $ 1.385 billion in the first quarter, against a target of $1.112 billion.

Of this spending, $1.102 billion (79.6 percent) was on recurrent expenditure while $283 million (20.44 percent) was on capital expenditure.

Prices are expected to rise further on the back of premiums of up to 70 percent for the US dollar on the black market. Dual-listed stocks are also trading at a premium on the Zimbabwe Stock Exchange relative to other markets, suggesting real inflation rates may be higher than officially measured. Old Mutual shares currently cost 147 percent more on the ZSE than they do on the JSE.

The SADC Region registered annual inflation of 9.1 percent in May 2018 compared to May 2017, as measured by the region’s Harmonised Consumer Price Indices (HCPI). Inflation in South Africa, Zimbabwe’s main trading partner in the region, rose to 4.6 percent in June from 4.4 percent in May.