July inflation rises marginally, but wave of job losses could affect aggregate demand


At least 20 000 workers have lost their jobs since the Supreme Court ruling allowing employers to terminate workers’ contracts on notice.

ZIMBABWE’S annualised inflation rate rose by 0,04 percentage points to -2,77 percent in July, compared to the June rate of -2.81 percent, the national statistics agency said on Friday.

On a monthly basis, inflation rate in July was 0,06 percent, gaining 0,20 percentage points on the June rate of -0,14 percent, said the Zimbabwe National Statistics Agency.

This comes as both Treasury and the Reserve Bank of Zimbabwe failed to initiate policy measures that will significantly impact the country’s inflation which is below zero.

Although there was a gain in the year-on-year inflation numbers, it however is not enough to reverse the deflationary pressures. On average prices have continued to decline month on month and the increasing unemployment levels are only going to add pressure on aggregate demand which will inevitably add to the deflationary pressures in the near term.

The year on year food and non-alcoholic beverages inflation remained negative at -3,65 percent from -3,32 percent recorded in June. The current trend in food inflation puts a squeeze on retailers operating margins and as such performance in the sector is expected to continue showing signs of weakness. The non-food inflation rate was -2,35 percent.

The month on month inflation rate for July was 0,06 percent gaining 0,20 percentage points on the June inflation rate of -0,14 percent.

The month on month Food and Non-Alcoholic Beverages inflation stood at 0,81 percent in July, shedding 0,36 percentage points on the June rate of -0,45 percent. The month on month non-food inflation stood at 0.47 percent, gaining 0,46 percentage points on the June rate of 0,01 percent.

The CPI for the month ending July stood at 97,95 compared to 97,90 in June 2015 and 100,74 in July 2014.FinX