The industries of Zimbabwe have demanded tougher action to combat persistent inflationary pressures.
The Confederation of Zimbabwe Industries (CZI) expressed concern about the sharp increase in month-to-month inflation towards the end of 2022, even after a drop in the annual rate.
Zimbabwe’s annual inflation rate dropped from a peak of 285% in August to 243% in December as the government proceeded to evaluate the terms of payment for commodities and the central bank stepped up its market-cooling operations.
CZI said additional austerity measures are required to lower the rate which is unquestionably the highest in the world.
In its examination of inflationary tendencies for 2023 titled “2022 Inflation and Currency Developments Round-Up,” CZI said:
Annual inflation ended the year 2022 at 243,8%, shrinking by 11,2 percentage points from the November inflation rate..
The December annual inflation rate was above the 2022 national budget end period target of between 15% and 20%, as well as above the February monetary policy statement target of 25% to 35%.
The beginning of the year is associated with new policy measures for the year, which may hold inflation down but (these) seem to fail to stay the course as it (inflation) surges again. Delayed policy responses seem to sustain high inflation or its upward movement.
CZI said the sudden rise in December’s month-over-month inflation (2.4%) is cause for concern as it may indicate the need for new policies.
In Zimbabwe, inflation typically responds to depreciation in the exchange rate, particularly the rate on the black market which began to decline in December 2022.
The Reserve Bank of Zimbabwe (RBZ)’s foreign currency auction results on Tuesday show that the Zimbabwe dollar is currently trading at $732 to the US dollar, continuing its freefall versus the US dollar.
The Zimbabwe dollar is trading at $1100 to the US dollar on the black market up from $900 recorded last week.