Why ZIMSTAT inflation figures are too modest and misleading.
MONTH on month inflation rate for the period May 2023 rose significantly to 15,7% on the back of a sharp increase in prices, Zimbabwe National Statistics Agency (ZIMSTAT) reported Friday.
During the period, the consuming public experienced excessive price hikes following the accelerated depreciation of the exchange rate which now hovers around US$1: ZWL 3,000 on the parallel market and US$1: ZWL 1,888 on the official market.
Traditionally, price hikes in Zimbabwe and inflation rates are not always a reflection of economic fundamentals but perceptions anticipating exchange rate depreciation which often sees businesses engaging in forward pricing to protect the value of stock.
The report by ZIMSTAT on inflation statistics is incorrect due to several reasons.
Firstly, the report only focuses on the month-on-month inflation rate for May 2023, which is not a comprehensive representation of the overall inflation trend.
Secondly, the report fails to consider the impact of external factors such as global economic conditions and government policies on inflation.
Moreover, the report attributes the rise in inflation solely to price hikes caused by the depreciation of the exchange rate. However, this is not entirely accurate as inflation rates in Zimbabwe are often influenced by perceptions of exchange rate depreciation, leading to businesses engaging in forward pricing.
In conclusion, the ZIMSTAT report on inflation statistics is flawed and fails to provide a complete picture of the inflation trend in Zimbabwe. It is crucial for the agency to consider all factors that contribute to inflation and provide a comprehensive report that accurately reflects the economic situation in the country.