Nevanji Munyaradzi Chiondegwa
Zimbabwe`s annual inflation has dropped to 56.37 percent from 106.6 percent, the first time it has reached double digits in two years.
This data was shared by the Zimbabwe National Statistical Agency in their latest periodic reports.
Month on month inflation was 2.56%, shedding 1,32 percentage points on the June 2021 rate of 3.88%.
The yearly inflation which in July last year stood 837.53% has slowed down massively from those days which had seen political figures like Tendai Biti, the MDC Alliance deputy resident claim that it will take six months for the Government to crumble.
So sure was Biti of his predictions which were backed by statistical data from CATO International’s Professor Steve Hanke who had the inflation of Zimbabwe at a massive 1133.37% then according to his calculations.
He spoke of there not being gas, fuel and electricity and run away prices of goods. So sure was he of his statement that he called a press conference of international media to tell them how the government would fold up in six months.
Biti of course had stated that they as MDC Alliance would mobilise more sanctions only a year and a half earlier.
He had said; “We will mobilise more sanctions, ZANU PF won’t get a penny.”
He was sure there was no rescue coming the Zimbabwean way. His mission, as far as he was concerned had succeeded.
The economy was folding up, there was no power, gas and fuel, prices of goods were shooting up astronomically.
What he did not count on was the genius of a man named Professor Mthuli Ncube! The man has clearly proven his talent and worth.
First, let us look at the fact that Reserve Bank of Zimbabwe had predicted the inflation for June to be at 55%.
Mathematically, the current inflation is therefore within the error of limit and therefore the 25% year end inflation prediction is very much achievable.
This would see prices stabilize next year as inflation plunges further towards single digit figures.
The significance of the 56.37% figure compared to the 837,53% is that, prices are still rising and rising fast but not as fast as they used to. They are going at a slower speed than they were at the same period last year.
Lets give an example of a truck travelling at a speed of 160km/hour and then loses brakes.
Clearly we worry about the ability of the driver to control it and therefore loss of life and damage to property will likely occur.
But had it lost brakes while travelling at a speed of say, 50km/hour, it will be easy to bring down to a halt for it has less momentum and will eventually come to a stop sans loss of life.
From 837,53% to 56,37%, it is clear we are headed for stabilisation of prices.
A brief explanation of statistics would be good. The rate of inflation measures the rate at which prices are going up. This automatically means that prices will be going up. What then is there to celebrate if prices are still going up?
Well, for a person in Mabvuku, the prices are now going up at a slower rate than before.
This means they now have more disposable income and therefore can put some aside as savings without worrying about it losing value and not being able to purchase same goods.
According to Milton Friedman, an authority on the subject said, “Inflation is always and everywhere a monetary phenomenon.” too much money chasing too few good leads to high inflation. Prof Ncube and the RBZ Governor Dr John Mangudya have done well to keep a tight rein on money supply.
Prof Ncube’s austerity measures helped us achieve the fundamentals and RBZ has been tight-fisted about the printing press.
- Authorities may need to relook at the foreign currency auction system, it may be the one fuelling inflation as critical corporates who are not getting their purchased foreign currency on time end up on the parallel market.
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