In May the month on month inflation rate jumped to 98.85% from 75.86% in April a 22% jump according to the latest figures by ZimStat the government department tasked with coming up with various critical statistics for Zimbabwe.
On a month to month basis prices of goods rose by rose by 12.54% in May as compared to 5.52% in April. This shows that the rate at which the prices of goods are rising are increasing despite government insistence that they will start falling soon.
One sobering fact is that this is the highest rise in prices ever since we adopted the multicurrency basket in 2009. At this rate the country will be firmly sitting in the hyperinflation zone by year end.
Indeed it could be worse
In fact the rate of inflation should well be beyond 200% and is only lower because ZimState tinkered with the method they are using to calculate inflation.
According to news reports they are now using the Consumer Price Index, although its not clear what method they were using before this. CPI is the most accepted method of measuring inflation anyway. However under their old method, some people claim, inflation could even be higher than 200%, the accepted hyperinflation threshold.
Don’t expect things to change
The way things are do not expect the rate of inflation to go down until some sort of equilibrum is reached. At the moment the Balance of Payments balance is still negative every quarter, although the deficit is falling.
The way the exchange rate keeps increasing also points to an increase in money supply. The RBZ has been notoriously opaque when it comes to truthfully communicating the amount of money supply within our economy.
