Zim deflationary pressures persist

Zim deflationary pressures persist
Published: 16 April 2014
THE year-on-year inflation rate for the month of March was -0,91%  shedding 0,42 percentage points from the previous month, data released by the Zimbabwe National Statistical Agency (ZimStat) shows.

The year on year inflation for February was -0,49% as  deflationary pressures due to depressed aggregate demand persisted.

This means that prices as measured by the all items Consumer Price Index (CPI) decreased by an average of 0,91 percentage points between March 2013 and March 2014.

Economists say the new inflation data required policymakers to immediately spring into action.

"Someone must be scared seeing those numbers. There should be a conference somewhere to restore the economy," independent economist Moses Chundu said yesterday.

Another economist Joseph Mverecha said it has been focused that the economy has entered into deflation and it may persist to June and July.

He said this was  not something that the country could easily get out of.

"It is an indication that the economy is losing steam and momentum. It is the compounding effect of all the factors affecting aggregate demand, and also the widening current account and the decline in capacity utilisation," Mverecha said.

"It means that the deflation may persist to the near term and is not something that we can get out of easily."

Zimstat's data showed that the month-on-month inflation rate in March 2014 was -0,22%  shedding 0,27 percentage points on the February 2014 rate of 0,05%.

"This means that prices as measured by the all items CPI decreased at an average rate 0,22% from February 2014 to March 2014," ZimStat said.

In its latest bulletin, Treasury said inflation was expected to remain subdued due to depressed demand for final goods and services in the economy at a given time and at a given price (aggregate demand), stable international oil and food prices, as well as strengthening of the US dollar against currencies of major trading partners.

"In this regard, deflationary pressures experienced during February will continue to affect the economy in 2014, due to an extending negative output gap," the Treasury report said.

In recent updates, companies have reported low uptake of products due to a slowdown in consumer spending and economic activity.

- newsday
Tags: Deflation,


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