Zimbabwe’s citizens face more economic difficulties as their currency continues to fall in value against the dollar, causing a 175 per cent inflation rate that marks a sombre new low in the downward spiral of the nation’s purchasing power.
“The month-on-month inflation rate in June 2023 was 74.5%, gaining 58.8 percentage points on the May 2023 rate of 15.7%. The year-on-year inflation rate for the month of June 2023 as measured by the all-items Consumer Price Index was 175.8%,” stated Zimbabwe’s director-general of the National Statistics Agency, Taguma Mahonde.
According to Trust Chikohora, ex-president of the Zimbabwe Chamber of Commerce, the rising inflation rate is caused by the local currency’s declining value compared to the dollar, which pushes up prices.
“Maybe it will start to even out as we move forward in July and beyond, especially if the government continues to move with measures they have been putting in place now,” said Mr Chikohora. “That’s to minimise activity on the parallel market, to have [a] situation where interest rates are higher than inflation, money supply growth needs to be curtailed so that government is not pumping Zim dollar money into the market.”
“Real GDP growth is estimated to have slowed to 3.4 per cent in 2022 on the back of worsening agriculture conditions and macroeconomic instability. Annual inflation returned to triple-digit levels in 2022, driven by both monetary expansion and external shocks,” stated the World Bank’s April 2023 Macro Poverty Outlook for Zimbabwe.
It added, “Poverty levels, albeit declining, remained elevated. Economic growth is projected to slow to 2.9 per cent in 2023 and remains subdued in the medium term, reflecting global shocks and structural bottlenecks.”
