Zim inflation backtracking from regional range

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Southern Times Correspondent

Harare - Southern African countries witnessed low inflation rates in February 2019 as demand for basic goods and services declined.

However, the annual inflation rate in Zimbabwe increased to 59.39 percent in February of 2019 from 56.9 percent in January, a percentage that is significantly higher than the regional rates.

Zimbabwe’s inflation rate has been highly affected by the parallel market exchange rate activities accompanied by speculation and low export activity. However, the Reserve Bank of Zimbabwe is in the process of setting up measures to control inflation hence optimistic to restore the situation.

“To anchor price stability, the bank shall aggressively intervene in the market to sterilise liquidity so as to help contain inflationary and exchange rate pressures. The bank will also implement a monetary targeting framework, with monetary aggregates as operational targets for monetary policy.

"The bank will appropriately target growth in base money with a view to help stabilise and anchor macroeconomic stability. The existing monetary policy instruments, including continued issuance of savings bonds and changes in the statutory reserve requirements, will be instrumental in achieving the reserve money target. The fiscal stance taken by Government to reduce recourse to the central bank overdraft and to limit the overdraft to statutory levels will provide further impetus on the bank’s ability to contain pressures on the goods and foreign exchange market," stated the February Reserve Bank of Zimbabwe monetary policy statement.

In Botswana, the annual inflation rate fell to 3.3 percent in February 2019 from 3.5 percent in the previous month. According to Statistics Botswana, the cost of food and non-alcoholic beverages dropped (-0.2 percent versus a flat reading in January) and prices of communication continued to fall (-9.3 percent, the same as in January). Also, prices eased for housing and utilities (3.3 percent vs 3.4 percent); miscellaneous goods and services (6.2 percent vs 6.4 percent); clothing and footwear (1.5 percent vs 1.6 percent); furnishings and household equipment (2 percent vs 2.1 percent); alcoholic beverages, tobacco and narcotics (0.4 percent vs 0.7 percent) and restaurants and hotels (2.4 percent vs 2.7 percent). On the other hand, cost of education rose further (3.2 percent vs 3 percent) and inflation was steady for transport (9.9 percent, the same as in January) and health (1.1 percent).

Zambia's annual inflation rate also trimmed down to 7.8 percent in February 2019 from 7.9 percent in the previous month. Prices slowed manly for food and non-alcoholic beverages (7.7percent vs 8.2percent in January), namely bread and cereals, meat products and vegetables including tomatoes, Chinese cabbage, pumpkin leaves and fresh maize cob.

Namibia also followed the trend with its annual inflation rate dropping to 4.4 percent in February 2019 from 4.7 percent in the previous month. It was the lowest inflation rate in six months, as prices eased for housing and utilities (1.9 percent from 2.9 percent in January); alcoholic beverages and tobacco (6.2 percent from 6.4 percent); furniture and household equipment (1.2 percent from 1.7 percent) and education (11.3 percent from 12 percent). Also, cost of clothing and footwear continued to fall (-0.7 percent, the same as in January).

South Africa’s annual inflation, however, marginally rose to 4.1 percent in February 2019 from 4 percent in the prior month, matching market expectations. Prices increased faster mainly for transport, as fuel cost rallied and medical insurance. However, the inflation rate remains firmly within the South African Reserve Bank (SARB) inflation target range of 3percent –6percent.

According to Statistics South Africa (SSA) on average, medical-aid schemes increased their tariffs by 8,3 percent, slightly higher than the 8,0 percent average recorded in 2018. Overall health costs in South Africa rose by 4,3percent year-on-year in February 2019. Medical practitioners raised their fees by 5,7 percent  on average, with doctors reporting the highest increase (5,8 percent ), followed by dentists (5,5 percent ) and hospitals (4,5 percent ).Transport prices climbed by 0,4 percent  month-on-month, underpinned by increases in the price of fuel (0,3percent ) car rental (7,3percent ) and tyres (0,8percent ). Annual inflation for food and non-alcoholic beverages softened in February 2019, falling to 2,9 percent  from 3,0 percent  in January 2019. Bread and cereal prices continued to climb, however, registering an annual rise of 4,9 percent. The current inflation rate for bread and cereal is in plain contrast to the inflation rate of the previous year, where the annual inflation rate for bread and cereals stood at -5,1 percent.

 

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