IT’S official: inflation is back!
But the usual suspect – Reserve Bank of Zimbabwe chief Gideon Gono – has nothing to do with the slight rise of the demon this time around.
His hands are clean as he has not been printing any Zimbabwean dollars since the official dollarisation of the economy in February this year.
Zimbabwe’s month-on-month inflation rose to 0,6% in June from -1,0% in May, the Central Statistical Office (CSO) said this week.
CSO resumed calculating inflation figures in January after last releasing the figures in July last year.
Economic analysts said during the period under review inflation rose in June due to the firming of the rand against the American dollar coupled with rising utility bills such as telephone, municipal and electricity bills.
Fuel prices also fed into inflation, economists say.
Petrol rose by 50% to an average of US$1,50 per litre from US$1.
ZB Financial Holdings group economist Best Doroh said the rise in inflation was nothing to worry about for now. He said there was no discernable inflation trend yet, but warned that there was need to curb “unsustainably” high public utility bills before it worsens inflation outlook.
Said Doroh: “The main reason our inflation in US dollars terms rose in June 2009 is firstly, the strengthening of the rand against the US dollar given that we import most of our basic commodities from South Africa,” Doroh said.
Doroh said public utility charges such as electricity, water and rates were highly priced and that was translating into some pressure on prices.
“Fuel prices have generally been on the increase since June 2009 and that is feeding into higher food prices,” he said.
“However, the issue of unsustainably high public utility charges needs to be addressed up front otherwise it may worsen the inflation outlook.” Doroh said.
But why is CSO failing to calculate year on year figures?
“I suppose CSO does not have the figures for last year as we were still operating in the Zimbabwe dollar era. Thus, the impact on users of the inflation figures is that we somehow remain short-term sighted,” said Doroh.
“However, you can still extrapolate the figures to get an annual rate, which can be used as a projection,” added Doroh.
The decision to dollarise Zimbabwe’s economy has however brought a marked measure of stability to the economically troubled country.
Finance minister Tendai Biti last week urged businesses to avoid tendencies and practices that stoke inflationary pressures.
Said Biti: “Sustained stability in prices also restores the real value of savings and allows for longer term planning by both business and households.”
“It is therefore incumbent upon government and stakeholders, including business and labour, to collectively avoid tendencies and practices that threaten the gains in containing the inflationary pressures of the past,” said Biti.
Biti said for this to be achieved it required “close monitoring of all price developments, including the negative tendencies in fuel pricing which since June 2009 have seen inconsistent upward reviews”.
“Similarly, utility tariff adjustments by local authorities and some of our parastatals will also warrant close tracking of developments, with measures quickly instituted to ensure that our gains in inflation reduction are not reversed. Business, on its part remains urged to act responsibly in reviewing pricing arrangements,” he said.