eBusiness Weekly
Business Writer
Zimbabwe’s inflation for the year 2022, closed at 243,8 percent down from a peak of 285 percent in August of the same year, figures released by the Zimbabwe Statistics Agency (Zimstat) show.
On a month-on-month basis, inflation ended the year at 2,4 percent having slid from a peak of 30,7 percent in June 2022.
Such high levels of inflation have been of major concern to authorities and consumers.
In response to domestic inflation dynamics, as well as the passthrough effects of increases in energy, food prices, and supply chain cost pressures on the economy, Government tightened fiscal and monetary policies that managed to contain the excessive depreciation of the local currency against the US$ on the parallel market, a major driver of domestic inflation.
Among other measures, the issuance of gold coins, enforcement of value-for-money audits by Government in its procurement processes and effective monitoring, as well as enforcement of AML/CFT by the Financial Intelligence Unit of the Reserve Bank, re-anchored inflation and exchange rate expectations.
But not before consumers faced the full wrath of inflation on their purchasing power with prices of food and energy rising the most.
Food
The rising cost of food outpaced overall inflation.
Inflation for food & no alcoholic beverages closed the year at 285,2 percent but bread and cereals were at 313 percent while inflation for meat was at a staggering 322,8 percent.
The Food Poverty Line (FPL) for one person in December 2022 was $22,193.00.
The food poverty line (FPL) represents the amount of money that an individual will require to afford the minimum required daily energy intake of 2 100 calories.
The year 2022 started with a person needing just $6,152.87 for food for them not to be deemed as poor.
Food constitutes 30,34 percent of Zimbabwe Statistics Agency’s inflation basket.
The conflict in Ukraine played a large role in rising food costs — a result of disruptions in three major commodities: wheat, edible oil, and fertilisers.
The Total Consumption Poverty Line (TCPL) for Zimbabwe stood at $29,219.01 per person in December 2022. This means that an individual required that much to purchase both non-food and food items as at December 2022 in order not to be deemed poor.
The year 2022 started with a person requiring just $8,495.58 to meet their total consumption needs.
Currency depreciation on the domestic economy must have had a larger contribution on the inflation outturn as well.
Energy
Electricity also provided a price shock for consumers with year-on-year inflation of 489,5 percent, the highest from the overall basket.
National power utility ZESA Holdings adjusted tariffs several times last year as it struggled to service a “ballooning power import debt.”
Prior to the tariff adjustments, ZESA was reportedly charging tariffs that were below cost of producing electricity. This contributed to increased power cuts and failure to replace damaged equipment.
Going into 2023 the outlook for domestic food price inflation remains uncertain, and highly dependent on global food price developments, weather patterns and fertilizer prices. Analysts predict the cost of electricity will rise yet again this year.
