November inflation in marginal gain but remains in negative territory


Reserve Bank Governor John Mangudya

ZIMBABWE’S year-on-year inflation rate for the month of November gained 0,83 percentage points on the October 2015 rate of -3,29 percent, to end the month of November at -2,46 percent.  This comes on the back of marginal advances in the Non-food category.

However, deflationary pressures still exist, driven by the South African rand`s continued softening against the US dollar, tight liquidity and the waning aggregate demand in the economy. In 2015, the general price level in the economy has remained low, with year-on-year inflation starting the year at -1,3 percent.

The inflation outlook remains negative, and analysts have said that if current trends persist, Zimbabwe`s annual inflation may breach the -4-6 percent mark, especially as the green back continues to appreciate against the rand ahead of an expected rate hike by the US Fed on Wednesday.

However inflation is expected to inflation is expected to revert to positive territory in the fourth quarter of 2016 if current efforts by Government to resolve the external debt overhang unlock additional financing critical to rejuvenate the economy and stimulate aggregate demand.

The year on year Food and Non Alcoholic beverages inflation prone to transitory shocks stood at -3,85 percent whilst the Non-food inflation rate was -1,80 percent. In the Food and Non Alcoholic beverages category, most of the subcategories continued their slide, with fish and sea food, milk, cheese and eggs and oils and fats recording some of the major declines in the month of November.

Food retailers continue to bear the brunt of the inflation deceleration as they have been forced to rely on promotions to spur retail sales growth. Zimbabwean households have been confronted by strong economic headwinds this year that have further put pressure on already depressed disposable incomes.

Authorities insist that the sustained macro-economic sustainability, with low inflation levels, continues to foster a favourable economic environment.

The month on month inflation rate in November 2015 was 0,16 percent firming by 0.45 percentage points on October 2015 rate of -0,29 percent.

The month on month Food and Non Alcoholic Beverages inflation rate stood at 0,04 percent in November 2015, gaining 0,57 percentage points on the October 2015 rate of -0,53 percent

Non-Food inflation gained 0,39 percentage points to stand at 0,22 percent month-on-month from the October 2015 rate of -0,17 percent. FinX
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