eBusiness Weekly
Business Writer
Month-on-month inflation for January 2022 stood at 5,34 percent shedding 0,42 percentage points on the December 2021 rate of 5,76 percent, according to figures released by Zimstat today.
The month-on-month Food and Non Alcoholic Beverages inflation rate stood at 6.79 percent in January 2022, gaining 0.57 percentage points on the December 2021 rate of 6.22 percent.
The month-on-month non-food inflation rate stood at 4.25 percent, shedding 1.16 percentage points on the December 2021 rate of 5.41 percent.
The year on year inflation rate (annual percentage change) for the month of January 2022 as measured by the all items Consumer Price Index (CPI) stood at 60,61 percent. Year on year Inflation was measured at 60,7 percent in December 2021.
This means price increases recorded in January 2022 were at almost at the same pace as in December 2021.
Analysts and industrialists have identified inflation as a major factor that could present significant risk to the country’s economic growth prospects in 2022.
The country continues to experience persistently high inflation that has eroded consumers’ disposable incomes and firms’ spending power on investments.
“Runaway inflation is a more significant risk in 2022 (than the pandemic),” analyst Walter Mandeya of Trigrams Investments in a previous interview with this publication.
“Inflation will eat into wages and reducing demand,” said Mandeya, adding that the “Reserve Bank of Zimbabwe might be forced to raise rates again in an effort to tame inflation.”
The central bank responded to mounting concern about rapidly rising prices in late October 2021 by increasing the Bank policy rate from 40 percent to 60 percent and the Medium Term Bank Accommodation (MBA) Facility interest rate from 30 percent to 40 percent.
Inflation rose sharply last year “driven mainly by the resurgence in the volatility of the parallel market exchange rate”, the RBZ said in justifying the rate hike.
“Our economic outlook stands and falls with the inflation outlook. Should we see runaway inflation as high as this year, then consumers and businesses will not be left with much to deploy into consumption and investments and this could weigh on demand and subsequently derail economic growth,” said Mandeya.
Apart from local inflationary pressures, rising energy and food prices have fuelled higher inflation in many countries. These global factors may continue to add to inflation in 2022, especially high commodity food prices.
This has particularly negative consequences for households in low-income countries, Zimbabwe included, where about 40 percent of consumer spending is on food.
