Immediate policy correction decisions are needed for Zimbabwe’s inflation to go the right way; Confederation of Zimbabwe Industries (CZI) has warned.
The organization representing industries says the current upward trajectory of monthly inflation will make it difficult for Zimbabwean authorities to achieve the set target of 35% annual inflation by the end of 2022.
“Changing the trend requires immediate and not delayed action on the policy correction that will set the path back to the downward trends of 2021,” economists at CZI said.
“Without immediate policy correction decisions, it is difficult to see how this trend will retreat on its own.”
CZI also says imminent threats to inflation stabilization Zimbabwe must watch out for include the Russia-Ukraine war, elections, and drought.
The Russia-Ukraine war is predicted to disturb the distribution of oil and wheat resulting in the increase of the products’ prices. Zimbabwe increased the prices of fuel to US$1.68 after the war in Europe.
Election campaigns, which lead to massive spending by political parties campaigning may result in an increase in money supply which fuels inflation.
Evidence on the ground suggests low rainfall which leads to poor harvest; and the resultant of this is an increase in inflation; with food staff having to be imported.
Zimbabwe has the highest annual inflation rate in Southern Africa at 61%.
“There is urgent need to reverse the upward trend in inflation as further delays might see the situation getting worse in the following months as inflation expectations take hold due to developments at the global level,” CZI says.
