Zim inflationoutlook positive

Harare Bureau
ZIMBABWE’S inflation rate trajectory is showing potential for significant sustained decline after November 2024 saw a substantial slowdown in the rate of month-on-month price increases.
There is every justification for the country to be positive about the future of the inflation direction, as this bodes well for the achievement of its long-term goal of reducing inflation to a target of less than 3 percent by 2025.
Data from the Zimbabwe National Statistics Agency (ZimStat) shows a steep decline in inflationary pressures in November.
The Zimbabwe Gold (ZiG) Consumer Price Index (CPI) month-on-month inflation rate declined by 11,7 percent in November, a marked retreat after the dramatic increase of 37,2 percent in October. This 25,5 percentage point reduction highlights tangible progress in efforts to lower inflation and keep it within acceptable bands.
“Prices, on average, increased by 11,7 percent between October and November, reflecting a notable cooling in inflationary pressures,” ZimStat noted in its monthly report.
The food and non-alcoholic beverages category experienced the sharpest decline, after dropping to 15,7 percent from 49,2 percent the previous month.
Non-food inflation also eased, dropping from 31,7 percent in October to 9,7 percent in November. Economists attributed the inflation fall to robust measures by the Reserve Bank of Zimbabwe (RBZ) and the tight fiscal policy stance of the Treasury.
Mr Tinevimbo Shava, an economist with the Zimbabwe Economic Analysis Group, highlighted the positive impact of the RBZ’s proactive stance.
“The Reserve Bank’s decision to raise interest rates and reduce money supply growth has had a significant impact in curbing hyper-inflationary tendencies,” Mr Shava explained.
He, however, warned that challenges such as exchange rate volatility and supply chain disruptions still posed significant threats.

“Until these are addressed, inflationary risks could resurface,” he cautioned.
The weighted CPI further indicates moderation in inflationary pressures, with month-on-month inflation retreating to 2,2 percent in November from 7,3 percent in October. Food inflation dropped to 5,2 percent, a significant decline from 16,1 percent, while non-food inflation moderated to 0,7 percent from 3,2 percent.
Meanwhile, goods and services priced in US dollars remained relatively stable.
Month-on-month inflation in the US dollar CPI stood at a mere 0,1 percent in November, compared to 0,7 percent in October. Year-on-year inflation in this index was a manageable 3,3 percent.
Ms Gladys Shumbambiri-Mutsopotsi, an economist, commended the central bank’s strategies, particularly its willing-buyer, willing-seller-based foreign exchange system and efforts to enhance fiscal discipline.
“The central bank deserves credit for stabilising inflationary pressures in a highly challenging environment,” she said. “The reduction in food and non-food inflation reflects a return to more predictable pricing, which is crucial for household budgets and business planning.”
However, both Mr Shava and Ms Shumbambiri-Mutsopotsi emphasised the need for structural reforms.
“Without significant investments in domestic production and infrastructure, lasting stability will remain elusive,” Ms Shumbambiri-Mutsopotsi warned.
Despite these achievements, Zimbabwe’s inflation rate remains above the RBZ’s 7 percent target for 2024.
Finance, Economic Development and Investment Promotion Minister Professor Mthuli Ncube, however, remains optimistic about the future. During his presentation of the 2025 National Budget last week, Minister Ncube set a target of below 3 percent Zimbabwe Gold (ZiG) inflation by 2025.
“In 2025, ZiG inflation is expected to remain stable, with average month-on-month inflation of below 3 percent, on the back of tight fiscal and monetary policies,” Minister Ncube announced.
He cited the introduction of ZiG in April 2024 as a turning point.
ZiG stabilised local currency prices when it was introduced earlier this year, with month-on-month inflation dropping to -2,4 percent in May 2024 and averaging 0,0 percent during the second quarter.
However, inflationary pressures re-emerged between August and October due to activity in the parallel foreign exchange market.
To counter these pressures, the Monetary Policy Committee (MPC) introduced several decisive measures.
“The MPC increased the bank policy rate, standardised statutory reserve requirements for deposits and allowed greater exchange rate flexibility,” Minister Ncube explained.
Additionally, the foreign exchange limit for individuals was reduced from US$10 000 to US$2 000, while the local currency stabilised at US$1: ZiG25.
These interventions have since stabilised exchange rates in both official and parallel markets.
“Prices for goods and services have relatively been stable following the introduction of ZiG,” Minister Ncube remarked, acknowledging the progress made in 2024.
Nonetheless, year-on-year inflation in the US dollar index rose from -2,9 percent in January to 3,3 percent in November 2024, indicating persistent underlying challenges.
Mr Shava stressed the importance of international re-engagement to bolster Zimbabwe’s economic recovery.
“Zimbabwe needs external partners to help bridge the financing gap and catalyse long-term growth,” he said.
Ms Shumbambiri-Mutsopotsi echoed these sentiments, noting that the nation’s structural vulnerabilities must be addressed to ensure lasting stability.
“Inflation is cooling, but these foundational issues continue to loom large,” she said.
Looking ahead, analysts agree that Zimbabwe faces a delicate balancing act.
The sharp reduction in month-on-month inflation in November offers the much-needed reprieve for citizens grappling with years of soaring prices. However, achieving the ambitious 2025 target will require sustained vigilance and effective policy implementation.
“We are confident that the measures in place will sustain the progress made and help achieve our 2025 target,” Minister Ncube concluded.