At last one banker says it is price correction not deflation

One banker has finally said what is happening in Zimbabwe is price correction and not deflation, and it is nothing to worry about.

John Mushayavanhu of FBC Holdings was quoted by The Herald as saying: “I believe that what we are seeing in this country is not deflation, but a correction of pricing caused by the depreciation of the rand and increased competition. Unfortunately, many people hung on to those huge margins from the hyperinflation era and dollarisation has allowed us to understand what the price should really be. In the past, people were used to making higher margins but I think now that we have adopted the US dollar, many have realised that there is still an opportunity to make money with lower margins. This is why we have seen prices falling and that does not necessarily mean that the country is headed towards deflation. The message that I want to say is that if you can’t make it in the US dollar then you cannot make it.”

The Insider this week argued that what was happening in Zimbabwe was disinflation and not deflation and there is a big difference between the two.

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