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Annual inflation gains marginally in June

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Annual inflation for June gained 0.33 percentage points but still remained in the negative at -1.37%. According to the latest data from Zimstat prices decreased by an average of -1.37 percentage points between June 2015 and June 2016.

The annual inflation for May was at -1.69%.

Aggregate demand remains weak with consumers now directing most of their spending dollars to immediate necessities. Due to the country’s dollarized economy, authorities lack the freedom to use monetary policy or exchange rate adjustments to influence inflation. The liquidity situation has remained dire although tobacco inflows has helped to boost money supply. According to figures from the Tobacco Industry and Marketing Board, $516 million worth of tobacco had been sold as of Thursday July 14 against $490.6 million last year.

 

Although a return to positive inflation before the end of 2016 is expected, a lack of demand-side pressures will help weigh on price growth

The year on year Food and Non Alcoholic beverages inflation stood at -4.04% due mainly to competition-driven retail disinflation in the food categories while the Non-food inflation rate was -0.09%. In June, inflationary pressures were seen on non-food items such as education, health and personal care inflation. In the same period last year, inflation was near positive at -0.08% with the rand trading at 12.4 to the US$.

The month on month inflation rate in June was 0.19% gaining 0.43 percentage points on May 2016 rate of -0.24 percent.  The month on month Food and Non Alcoholic Beverages inflation rate stood at -0.35%, gaining 0.14 percentage points on the May rate of -0.49%. The month on month non-food inflation rate stood at 0.44%, gaining 0.57 percentage points on the May rate of  -0.12 %

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