Zimbabwe inflation surges for first time since ZiG launch

By Bloomberg

• Consumer prices surged by 1.4% in August, following a 0.1% decline in July.
• Inflation surge attributed to escalating costs of food and non-alcoholic beverages, raising worries about economic stability.

HARARE: Zimbabwe’s monthly inflation rate climbed to the highest level since the authorities started measuring prices in its bullion-backed currency.

Consumer prices rose 1.4% in August, compared with a 0.1% decline a month earlier, the Zimbabwe National Statistics Agency said Monday during an online briefing. The largest contributors to the inflation surge were food and non-alcoholic beverages, according to the agency.

The southern African nation began computing inflation using its new currency, the ZiG, in May.

ZiG, short for Zimbabwe Gold, was launched on April 5 to replace the Zimbabwean dollar, which had crashed several times since being reintroduced in 2019, fanning inflation. It’s the nation’s sixth attempt at introducing a stable local currency in 15 years.

While the currency’s recent relative stability against the dollar has helped tame price pressures, a severe drought has fanned food inflation and is expected to continue to do so until the next harvest around March next year.

The country is facing food shortages and needs as much as $400 million to mobilize 290,000 tons of corn, the nation’s staple, according to the United Nations’ World Food Programme.

Zimbabwe’s government and private millers are importing grain to help augment food supplies, an effort that has the downside risk of exerting pressure on the exchange rate, Governor John Mushayavanhu said last month. The ZiG has depreciated 0.2% against the dollar this month to trade at a record low of 13.82 on Monday.