BY business reporter
Inflation accelerated to a new 10-year high of 56,9% year-on-year in January, from 42,09% in December, propelled by increases in the price of basic goods and beer, the Zimbabwe National Statistics Agency said on Friday.
On a monthly basis, prices increased 10,75% in January, compared to 9,03% in December.
Harare-based economist Persistence Gwanyanya said the surge in inflation was partly due to the steep fuel price increases announced by President Emmerson Mnangagwa last month.
The fuel price review, which saw the cost of petrol jumping from an average of $1,36 a litre to $3,33, sparked deadly protests across the country.
“The ripple effect of fuel price increases is a big component in the average consumer basket,” Gwanyanya said.
“The rising inflation also reflects the widening gap between the United States dollar and the real-time gross settlement (RTGS) rates.
“A solution around the exchange rate will determine the inflation outlook.”
He predicted that the inflation rate would continue to soar because of the pending review of civil servants’ salaries.
“Going into the future, we are going to see more inflationary pressure piling up on government,” he said.
“This is all because civil servants are going to demand a review of their salaries.”
Economic analyst Clemence Machadu warned that rising inflation would result in more labour unrest.
“If the inflation trend persists, we are likely to see more labour uprisings as workers demand wage increases to compensate for the eroded purchasing power with companies also recalibrating their investment decisions,” he said.
“The consumption behaviour of households might also change as they buy more goods today in anticipation of more price increases tomorrow.”
Steve Hanke, a renowned American economist based at the Johns Hopkins University who uses a special tool to track inflation around the world, last Thursday estimated that Zimbabwe’s annual inflation rate now hovered around 257%.
Mnangagwa’s administration has failed to inject life into the economy over a year since the former vice-president took over from long-time ruler Robert Mugabe during a 2017 military coup.