A business report by the respected Companies and Markets watchdog, said Zimbabwe was not moving back to episodes of hyperinflation. The Zimbabwe Business Forecast Report Q3 2010 published last Friday warned however that upside risks remained. Zimbabwe, whose inflation peaked at 500 billion percent in late 2008, has stabilised its economy under a coalition government set up last year by bitter rivals President Robert Mugabe and Prime Minister Morgan Tsvangirai.
“Our core scenario sees end-2010 inflation climbing to a relatively benign 7.7% y-o-y (from 4.8% in April),” the appraisal of the perfomance of the Zimbabwe economy, said. “This will provide some solace to consumers and businesses after facing years of hyperinflation. That said, upside risks to our inflation outlook do exist in the form of supply-side shocks.” The business analysis said “on a more positive economic note, we believe that the return of year-on-year (y-o-y) price growth in March 2010 does not mark the beginning of a return to hyperinflation given that a combination of limited liquidity and subdued domestic demand will help to keep a lid on prices.
” The annual figure was firmly in negative territory at -4.8 percent as recently as January, but the tide turned in March and analysts say the continuing rise in inflation increases the risk that figures will be back in double digits by the end of the year. The latest official figures saw Zimbabwe’s inflation quickening to 6.1 percent year-on-year in May compared to 4.8 percent in April, largely due to rising food prices and transport costs.
In March, monthly inflation was at 1.1 percent, representing the highest jump since the introduction of multiple currencies.
The month-on-month food and non-alcoholic beverages inflation peaked at 2.5% in March before going down to 0.9 percent in April and further to 0.56 percent in May.
Although grain production continues to improve, in 2010 the country is expected to produce about 1.3 million tonnes of staple maize which is marginally higher than 1.14 million tonnes produced last year. This is in comparison to the annual maize consumption of 1.8 million tonnes, this years maize deficit of over 500 000 tonnes will have to be met through imports as well as from donor agencies.
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