Zimbabwe National Statistical Agency (ZNSA) on Monday (August 22) announced that the southern African country’s annual inflation marginally dropped to 4.1 percent in July from 5.3 percent in June and attributed to falling prices of food and non-alcoholic beverages.

The drop, the second in two months running is much in line with Government’s projected target of 4,5 percent by year-end on the back of increased production in the mining and agriculture sectors.

“The year-on-year inflation rate (annual percentage change) for the month of July 2010 as measured by the all items Consumer Price Index (CPI) stood at 4.1 percent, shedding 1.2 percentage points on the June 2010 rate of 5.3 percent,” said the agency.

ZNSA said on a month-on-month basis, inflation remained unchanged at -0.1 percent.

“The month-on-month inflation rate (monthly percentage change) in July 2010 was -0.1 percent remaining unchanged on the June 2010 rate of -0.1 percent….This means that prices as measured by the all items CPI remained unchanged from June 2010 to July 2010.”

Zimbabwe, which at the peak of its economic crisis two years ago once recorded inflation of 500 billion percent, was able to tame the key rate after ditching its own discredited currency in favour of the American dollar and other foreign currencies.

For the first five months of the year, the rate of inflation was rising giving fears of double-digit figures by the end of this year but the June and July figures have shown significant easing.

However, a drop in the rate of inflation does not imply a drop in the prices of goods and services, but the magnitude of the rate at which prices increased over 12 months.

Figures show that month-on-month inflation rate for July remained unchanged at -0,1 percent.

This means that prices as measured by the all items CPI remained unchanged between June and July.

Non-food inflation fell from 4,42% to 2,9%.

A decade of hyperinflation ravaged Zimbabwe’s economy until the formation of a unity government last year and the decision to abandon the local currency in favour of US dollars.

The last official estimate of inflation in Zimbabwe dollars in 2008 was 230-million percent but independent experts said the real figure was in the
billions.

Finance Minister Tendai Biti last month said the country’s inflation will continue to slow this year.

However, economists say inflation will continue on the decline into 2010 buoyed by the sale of diamonds, participation of the capital market as well as increased production across all sectors of the economy.

Alois Xaba