A local research firm says it would have been better to issue a Consumer Price Index that just included Zimbabwean dollar and US dollar inflation in order to compare standard index movements.
Treasury maintains that blended inflation is a reasonable measure for depicting the actual situation on the ground, amid huge contestation from the market that it is not the most appropriate measure.
As a result of Statutory Instrument 27 of 2023, the only official inflation data being released is the blended inflation rate, which as of June 2023 was 101.5% YTD and 175.8% YoY.
“Unfortunately, these inflation numbers are difficult to apply to normal accounting conventions given their assumption of a standard 76% USD and 24% ZWL expenditure pattern. It would have been more beneficial to publish a pure ZWL and USD inflation Consumer Price Index so that standard index movements can be utilised for comparison purposes.
“As it stands, stakeholders are translating ZWL balances by making use of unconventional inflation estimates to make business decisions. This itself has self-feeding inflationary impacts,” First Mutual Wealth stated in its latest second quarter of 2023 economic review and investment outlook.
Some firms say this has caused top-line growth that is above inflationary figures.
Zimbabwe formally reached hyperinflation in June 2023 despite the stated inflation statistics being weighted.
“The blended nature of Zimbabwe’s inflation will obviously paint a watered-down picture of the true inflation impact that the country is facing regards the ZWL, however at 74.5% month on month inflation for June 2023, Zimbabwe has once again entered hyperinflation,” reads the report.
Experts say the direction of inflation exhibits a continued deviation from the downward trend observed since the beginning of 2023 – Harare