The month on month inflation has fallen for a third month in a row, as prices of goods rose at a slower pace since January, due to little shocks. This therefore means that the month on month rate has effectively continued to be within the Reserve Bank of Zimbabwe’s target of a monthly rate of not more than three percent per month which was missed by 0.45 percentage points in January.
According to the Zimbabwe National Statistics Agency (ZIMSTAT), the month-on-month inflation rate lost 0.67 percentage points on the March 2021 rate of 2.25% to close at 1.58% in April 2021.
Monthly inflation growth has been necessarily driven by monthly fuel increases since the beginning of the year.
“Had it not been of fuel increases, the country could have entered a period of negative inflation which might have driven the RBZ Monetary Policy Committee to revise its benchmark policy to stimulate investment for business recovery. However, with the recent recovery in commodity prices, inflation will continue to fall for the most part of the year, also coupled by an expected bumper harvest where government has recorded 60,000 tonnes already in the first two months,” said economist Tinevimbo Shava.
Food and Non-Alcoholic Beverages inflation rate for the month stood at 1.65 percent, that is 0.87 percentage points lower on the March 2021 rate of 2.52 percent. The month-on-month non-food inflation rate stood at 1.53%, easing 0.53 percentage points on the March 2021 rate of 2.06%.
In similar fashion the year-on-year inflation rate for the month of April 2021 as measured by the all items Consumer Price Index (CPI) stood at 194.07%, down from 240.6% in March 2021.
The Central Bank continues to move with money supply targeting as a way of dealing with inflation, which some have said is going to stifle growth as money supply growth needed for loans to recover from the pandemic is insufficient.
Year on year inflation is targeted to close the year below 10%, which translates to a tight money supply monitoring, thereby reducing the chances of a huge interest rate cut in 2021, in order to achieve the target. – HARARE