Zimbabwe: RBZ spreading weird signals about the inflation
The Zimbabwe African National Union – Patriotic Front (ZANU-PF) are really trying to forge the narrative and the story on their monetary policy. As the Reserve Bank of Zimbabwe (RBZ) and their Governor dropped the Policy, while the nation is busy finding out when to mourn its previous President Mugabe.
In the midst of this, the RBZ could have been upfront and shown the reality, but instead it coming up with some steps and half-baked solutions, which will not generate trust for the financial institution nor the economy itself. As it soon releasing a new national currency on the back of the RTGS Dollar and Bond-Notes. We are the half-way to hell or heaven, but surely most likely on a ride of hyper-inflation and the state doesn’t want say so.
“Notwithstanding these measures, annual inflation escalated from about 5.39 percent in September 2018 to 175.5 percent in June 2019, mainly reflecting the exchange rate price indexation in an environment of high premiums in the parallel market” (…) “The country is moving towards bringing inflation under control and lowering it over time after the initial burst of high inflation that followed from the liberalisation of the exchange rate” (Reserve Bank of Zimbabwe – ‘2019 MID TERM MONETARY POLICY STATEMENT’ 13.09.2019).
Trading Economics reports: “Consumer Price Index Cpi in Zimbabwe increased to 208.90 Index Points in July from 172.60 Index Points in June of 2019.”
In counter to the RBZ, the forecast is: “Consumer Price Index Cpi in Zimbabwe is expected to be 208.33 Index Points by the end of this quarter, according to Trading Economics global macro models and analysts expectations. Looking forward, we estimate Consumer Price Index Cpi in Zimbabwe to stand at 319.31 in 12 months time. In the long-term, the Zimbabwe Consumer Price Index Cpi is projected to trend around 322.34 Index Points in 2020, according to our econometric models”.
Comesa reported: “Zimbabwe recorded the highest year on year inflation rate of (+ 257.2 %)” (COMESA – ‘HCPI – COMESA Monthly News Release I s s u e N o . 96 J u l y 2 0 1 9).
With these statements alone, shows that the economy isn’t stabilizing, neither is it becoming better. The Forecasts are tragic, the rising inflation is spiralling out of control again. Like it has done in 2008. It is a decade later and the RBZ and Ministry of Finance haven’t learned. The Zanu-PF and its handlers things they can play this one out. But the inflation rising is at hyper-inflation levels.
That the RBZ didn’t want to address the vast difference between inflation rate in September 2018 to what is happening in July 2019. And the RBZ only shown the levels of June, but not July, which is a very weird. As the all numbers should be there. Since the 208% July numbers shows, that the RBZ and Ministry of Finance isn’t stabilizing it, as it went up from 172% in June. The forecast, which is speculated, as it has models on the possible outcome. Zimbabwe might end up with up to 319% in 12 months time. This means by July 2020 the hyper-inflation is persistent and continuing to worsening the situation.
The RBZ should be truthful about it. However, it seems to spread another message. Which seems like they don’t care about the reality or denying it to save face. Peace.