While Zimbabwean monetary authorities claim the local currency, ZiG – which has lost more than 49% of its value since its launch in April – has stabilised the market and prices, inflation is skyrocketing.
Government says annual inflation for August is 3.7%, but independent economists say it is 858%.
The gap between the official and unofficial inflation rates show authorities are not telling the truth about the state of prices and the economy.
Although they say prices are stable, in reality they are dramatically surging.
The price of Mazowe, which Zimbabwe’s most common juice bought by most families in general, for instance, moved from US$3 in February to US$5.10 and now US$7.20.
This means the price of Mazowe has more than doubled since February, while salaries remain unchanged or the local currency loses its purchasing power.
This also applies to many other basic commodities as well.
The official exchange rate remains pegged at US$1: ZiG 13.8, but in the parallel or black market, it is now US$1: ZiG30.
This has unleashed a new round of currency volatility and exchange rate-driven inflation yet again, problems that forced authorities to abandon the old Zimbabwean dollar on 5 April when they launched ZiG.
Zimbabwe has at least six versions of its currency since 1980.
Amid renewed volatility, authorities claim there is currency and price stability underpinned by ZiG, which they say is gold-backed and supported foreign exchange reserves.
In his recent monetary policy statement, Reserve Bank of Zimbabwe governor John Mushayavanhu said:
“Inflationary pressures have been contained as reflected by the month-onmonth ZiG inflation of -2.4%, 0.03%, -0.1% and 1.4% for May, June July and August 2024, respectively.
“The exchange rate has also remained stable since 5 April 2024.
“The price and exchange rate stability have been supported by the country’s robust foreign currency receipts, which increased by 9.5% in the first half of 2024, compared to the same period in 2023. The strong foreign currency receipts continued to support the country’s balance of payments position, which is anticipated to record a current account surplus for the sixth consecutive year since 2019. A strong external sector position will in turn foster sustained exchange rate stability. The financial sector and national payment systems have remained safe and sound to support seamless financial transactions in the economy. The favourable monetary and financial conditions have created a conducive environment for sustained economic growth which is projected to be 2% in 2024.
“The Reserve Bank’s monetary policy stance and the ZiG currency have, therefore, served the country well in fostering price and exchange rate stability and engendering confidence in the economy.”
But on the ground, the situation is different: ZiG has lost value by over 49% and prices are increasingly rising inexorably as the economy remains stuck in a quagmire and sink deeper.
