By Alois Vinga
ZIMBABWE’s inflation figures for May have broken a decade old record, officials figures show.
According to the Zimbabwe National Statistics Agency (ZimStat), the country’s inflation surged to 97.85% for the month of May 2019 leaving officials alarmed.
The record breaking figures were reached after a 22% jump from April’s 75.86%. ZimStat said on a monthly basis, prices rose by 12.54% in May as compared to 5.52% in April.
These are the highest figures since the inception of the multi-currency regime in 2009 as the nation continues to battle reforms being initiated after decades of economic recession.
Beginning March 2019 ZimStat announced a new inflation calculation method known as the Consumer Price Index (CPI) with new weights and classifications that are internationally recognised.
Under CPI the Classification of Individual Consumption by Purpose (COICOP) calculation methodology will be used. COICOP, is a reference classification which divides the purpose of individual consumption expenditures by three institutional sectors, namely household, non-profit institutions serving households, and general government.
Market analysts argue that if ZimStat had continued using the old calculation system, the inflation rate for the month would now be over 200 % effectively pushing the country into the hyperinflationary period.
The official rate of the local RTGS currency officially designated in March has since risen to six against the US dollar, reflecting a significant depreciation. However, what has worsened inflationary pressures is the prevalence of the parallel market, whose rate is currently 100% to the US dollar.
Independent analysts have projected inflation to close the year at over 250%, while the government says it expects inflation to start declining in the fourth quarter of the year.
Against the background, industrial productivity has remained subdued because of the lack of raw materials and proper industrial mechanisation due to critical foreign currency shortages.