ZIMSTAT has published the month on month inflation figures for January 2020 which show that the inflation rate fell by over 14% to a mere 2.2%. By comparison, the inflation rate in December was 16.6%.
Don’t get too carried away though. To be clear this fall in inflation rate is very encouraging but we have a sneaking feeling that authorities and some analyst are attaching too much significance to it. So we feel the need to point out two things:
- This fall is only temporary and it was probably a result of two things:
- A fall in demand brought about by the so-called “January disease”. A lot of parents often struggle in January as they have to pay fees and other related expenses which take away a big chunk of their income.
- Stability in the foreign exchange rates: During the months of November, December and January we enjoyed a bit of rare stability in exchange rates on the black market. This meant costs were relatively stable for most shops.
We know for certain inflation will go up again in February
While ZIMSTAT looks at data from the previous month one of our key missions is to look at current prices of various items. We must concede our surveys are nowhere near as extensive as ZIMSTAT in terms of items included but we are very certain the fall in inflation rate is temporary.
February’s inflation will go up driven mainly by food inflation. This month alone we have seen the price of mealie-meal double compared to January prices upon which ZIMSTAT’s inflation is based. Pushed by drought food prices are likely to continue to rise in the short term and nothing really seems to be in the works to stop this.