In­fla­tion slows down:

The Manica Post - - Front Page - Kudzanai Gerede Busi­ness Cor­re­spon­dent

LAT­EST fig­ures from the na­tional statis­tics agency (ZimS­tat) re­flects that the econ­omy is slowly trudg­ing into the sta­ble in­fla­tion­ary ter­ri­tory for the just ended month of June hav­ing en­dured sev­eral months of in­crease in in­fla­tion since be­gin­ning of the year.

Zim­babwe’s in­fla­tion sprung into pos­i­tive ter­ri­tory for the first time since 2014 in Jan­uary this year and since then it has taken a wor­ry­ingly up­ward tra­jec­tory record­ing 0.48 per­cent in April be­fore post­ing 0.75 per­cent rate in May.

This week ZimS­tat re­leased fig­ures show­ing year on year in­fla­tion rate for the month of June slowed down to 0.31 per­cent, post­ing a - 0.24 per­cent rate shed­ding 0.27 per­cent points on the May 2017 rate of 0.03 per­cent.

The month on month Food and Non Al­co­holic Bev­er­ages in­fla­tion rate stood at - 0.45per­cent in June2017, shed­ding 0.52per­cent­age points on the May 2017 rate of 0.07per­cent. The month on month non- food in­fla­tion rate stood at - 0.14 per­cent, shed­ding 0.15 per­cent­age points on the May 2017 rate of 0.01per­cent.

The lat­est fig­ures come as a re­prieve to both the con­strained con­sum­ing pub­lic and busi­ness amid cash short­ages sti­fling spend­ing but an­a­lysts warn of os­cil­lat­ing pat­terns in the cur­rent volatile en­vi­ron­ment.

Buy Zim­babwe eco­nomic an­a­lyst Mr Kip­son Gun­dani told Post Busi­ness in an in­ter­view that the slow­down in in­fla­tion is largely at­trib­uted to weak ag­gre­gate de­mand which started to man­i­fest by end of first quar­ter this year.

“Sup­pressed ag­gre­gate de­mand is mainly be­hind the de­crease on the in­fla­tion rate for the month of June,”

“If you look from Jan­uary to April there was a steady in­crease in con­sumer spend­ing, there was a spend­ing spree and this meant brisk busi­ness and im­porters were mak­ing use of the par­al­lel mar­ket at a premium to cope with the high de­mand. This was short lived and the cash short­ages would soon in­ten­sify”

“So from May to June it kind of sta­bi­lized as there isn’t much spend­ing hence prices are now sort of sta­ble and if in­creas­ing, the rate is very much slower,” said Gun­dani.

Ob­servers fur­ther point to the fail­ure by the Cen­tral Bank to ef­fec­tively cur­tail the flour­ish­ing of a three tier pric­ing sys­tem that is the root of in­fla­tion.

Dis­counts are be­ing put on sales on hard cur­rency while pay­ments on mo­bile money trans­fer sys­tems and Real Time Gross Set­tle­ments have a premium set on them.

The in­fla­tion out­look in the short to medium term re­mains am­bigu­ous with a host of eco­nomic fun­da­men­tals in dis­ar­ray such as an un­con­trolled mone­tary sys­tem char­ac­ter­ized by dis­torted ex­change rates for bond notes cur­rency among other is­sues.

“Go­ing for­ward, our type of in­fla­tion is a cost-push kind of in­fla­tion heav­ily de­pen­dent on costs more than any­thing else. So we are likely to be in the same mode for the fore­see­able fu­ture where we have an os­cil­lat­ing kind of in­fla­tion­ary sit­u­a­tion de­pend­ing on how the par­al­lel mar­ket is dic­tat­ing things un­less Cen­tral Bank finds the right mech­a­nisms to con­trol the mone­tary sys­tem again,” added Gun­dani.

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