eBusiness Weekly
Business Writer
Goods and services got a bit more expensive in September 2023 with inflation for the month coming out higher than that of August.
According to statistics released by Zimstat, year-on-year inflation stood at 18,4 percent for the month of September up 17,7 percent from the previous month.
Month-on-month inflation for the period under review also went up from a negative 1,3 percent in August to 1 percent.
Price increases were more pronounced in food and non-alcoholic beverages where year-on-year inflation stood at 23,1 percent.
The rate of inflation was, however, slower for non-food items with year-on-year inflation at 16,3 percent while month-on-month inflation was 0.9 percent.
Education, restaurants and hotels, communication, and housing were however more dear with year-on-year inflation at 31 percent, 23,9 percent, 50,2 percent and 25,3 respectively.
The overall year-on-year this year was at its highest in January at 53 percent but has been coming off since then.
Meanwhile ZimStat yesterday said it had changed the methodology that it uses to calculate inflation as the previous one had become irrelevant.
Before the change, ZimStat was computing the weighted index (ZWL & USD) using arithmetic aggregation of elementary indices but this arithmetic aggregation is not without its challenges.
“One such challenge is that the method follows the index with the higher magnitude, instead of the one with the higher weight.
“As a result, arithmetic aggregation was more inclined to the ZWL index, albeit accounting for 20 percent of the total weights. This trend was particularly pronounced in times of economic shocks, which mainly affected ZWL prices.”
To resolve this challenge, the Agency had a review of its methodologies based on recommendations from the SADC Technical Review Mission on Price Indices held in July 2023, that geometric aggregation be used in computing the weighted price indices.
In view of the foregoing, ZimStat, adopted the geometric aggregation method in computing the weighted Consumer Price Index beginning September 2023.
The migration to geometric aggregation has resulted in a decline of weighted inflation rates.
The change in the inflation calculating method comes as some stakeholders are finding the blended inflation difficult to use.
OK Zimbabwe, in its financials released this week said the adoption of the blended CPI statistics was deemed not appropriate for financial reporting purposes as the business’ financial statements were prepared in Zimbabwean dollars, which is the functional currency.
IAS 29 par 17 permits the use of an estimate-based price index in circumstances where the rate is not available.
“In the absence of the official ZWL CPI indexes, the business opted to use the Total Consumption Poverty Line ((TCPL) to estimate the missing CPIs as recommended by The Institute of Chartered Accountants Zimbabwe (ICAZ) given its very strong correlation with inflation,” reads part of a statement accompanying OK Zim’s results.
According to the latest ZimStat figures, TCPL figures for the month stood at $95 462,53 per person.
This means that an individual required that much to purchase both non-food and food items as at September 2023 in order not to be deemed poor.
This represents an increase of 4,8 percent when compared to the August 2023 figure of $91 063,30. Same time in 2022, the TCPL was $27 297,53 reflecting a 249,71 percent increase.
