The official Zimstats figure for Inflation for the month of December 2018 was reported at 42.09%. This is the highest reported figure since the economy dollarized in 2009. The official inflation rate has registered a double digit figure for the third straight month from October to December 2018. It is also the seventh consecutive month in which the rate has continued on an upward trajectory.
ZACPI INDEX METHODOLOGY The ZimBollar Adjusted Consumer Price Index (ZACPI) follows the normal Zimstats consumer basket. However, the basket weights are adjusted to include Foreign Currency as a basket item. The justification behind the inclusion of foreign currency is that foreign currency is being traded as a commodity in Zimbabwe and constitutes a significant portion of the cost build up for manufacturers, retailers and wholesalers. In recognition of this, the ZACPI Index basket consists of the following baskets and weights: A significant portion of the ZACPI basket comprises of food and non-alcoholic beverages which constitutes 28.45%. Foreign currency is the second biggest basket component at 15%, whilst housing, water and rates stand at 12.39%.
ZACPI INDEX-DECEMBER 2018 The December 2018 ZACPI inflation figure stands at 150.49%. This was mainly driven by foreign currency exchange rates which added 47.02% YoY between December 2017 and 2018. Food and Non Alcoholic beverages were the second largest contributor at 39.52%. Health also registered a very significant increase at 26.94% YoY in the period under review.
CONCLUSION It is expected that the inflation rate will continue in the outlook period as pressure on the foreign currency front continues to feed into inflation. The inflation pressures are expected to affect household disposable incomes as the government and private companies have resisted the pressure to increase wages by the same margin at which prices are increasing.