Zimbabwe inflation hits six-month high as currency plunges

Zimbabwe’s inflation rate jumped to its highest level in six months as the local dollar continued its losing streak against the greenback, in one of its worst starts to the year since the currency’s reintroduction in 2019.

Annual inflation surged to 47.6% in February from 34.8% a month before, the Zimbabwe National Statistics Agency said today. Consumer prices rose 5.4% in the month from 6.6% in January.

The acceleration in annual inflation adds to pressure on authorities to unveil new measures to support the foundering local currency, which has lost nearly two-thirds of its value on the official market so far this year.

President Emmerson Mnangagwa on 6 February hinted that fiscal and monetary authorities are working on a revamp of the Zimbabwean dollar. His Finance Minister Mthuli Ncube later said it may involve backing the currency with gold.

Their plans led the central bank to delay releasing a monetary policy statement after a rate-setting meeting held in January. Zimbabwe has the world’s highest interest rate of 130%, after regaining the position from Argentina.

Zimbabwe has struggled to stabilise its currency since its return to circulation, even as authorities have taken multiple steps to do so — including introducing gold coins and bullion-backed digital tokens known as ZiG. The local unit was reintroduced a decade after it was scrapped in favour of the US dollar after hyperinflation rendered it virtually worthless.- Bloomberg

(115 VIEWS)