Higher food and non – alcoholic beverages prices pushed inflation to 4,29 percent in July, the quickest rate since 2012, figures released by Zimbabwe National Statistics Agency (ZimStats) this week show.
This means prices are back to where they were at the end of 2012, when the Index was rebased to 100 as at December 2012.
According to Zimstat the year-on-year inflation rate (annual percentage change) for the month of July 2018 as measured by the all items Consumer Price Index (CPI) stood at 4,29 percent, gaining 1,38 percentage points on the June 2018 rate of 2,91 percent.
The CPI for the month ending July 2018 stood at 100.65 compared to 96.51 in July 2017 the second lowest since January 2017.
Economist John Robertson, said part of the reason for the size of this increase is the fact that at this time last year, the index was falling, widening the gap between the July 2017 figures (96.51) and July 2018 figures (100.65).
Food and Non Alcoholic beverages hit households with a 6,35 percent rise in July compared with June, whilst Non-food inflation rate was 3.33 percent. The price of food jumped 6,26 percent since July 2017, driven largely by the meat inflation at 9,70 percent, vegetables 9,16 percent and bread and cereals at 2.40 percent. Non-alcoholic beverages inflation came out at 8,08 percent.
For Non-food, clothing inflation came out at 6,63 percent, clothing material at 12,82 percent, footwear at 2,49 percent and health 2,68 percent.
But inflation for actual rentals for housing came out at a negative 3,61 percent and transport services at a negative 1,28 percent.
The latest inflation comes at a time a study conducted by the Reserve Bank of Zimbabwe (RBZ) shows the country can afford increases in annual inflation under the multi-currency regime to a maximum of 4,6 percent without hurting optimal economic growth thresholds.
The RBZ study conducted this year, estimated the growth optimising inflation rate for Zimbabwe and provided critical answers into long outstanding question of growth maximizing inflation rates, essential for policy making.
Under multi-currency, the inflation profile for Zimbabwe should not differ significantly from the inflation rates of countries of anchor currencies, according to the RBZ.
In Zimbabwe these include mainly the US and South Africa inflation rates. The southern African country adopted a basket of foreign currencies in 2009 at the height of hyperinflationary period in the country.
“Under multi-currency, Zimbabwe’s inflation can rise to 4,6 percent without necessarily hurting economic growth. Beyond 4,6 percent, however, inflation will contribute negatively to growth,” the study shows.