Zimbabwe Sees Annual Inflation Dropping Tenfold in 12 Months

(Bloomberg) -- Zimbabwe’s government gave the first glimpse of where it sees annual inflation going since suspending the publication of year-on-year data after price growth hit 176% in June.

“Monetary discipline and an efficient foreign-exchange market” will help to anchor the country’s disinflation program and see year-on-year inflation coming down to 50% by the end of December 2020, central bank Governor John Mangudya said in a monetary policy statement on Monday.

That’s 10 times less than the December 2019 rate of 521%. The statistics office hasn’t published annual inflation data for seven months, saying it wants to collect comparable data following the introduction of a new currency early in 2019.

After a decade of using a basket of foreign units, including the South African rand and the U.S. dollar, Zimbabwe reintroduced the local dollar. While the currency has plummeted to 17.7449 per dollar since a 1:1 peg was removed a year ago, the rate of depreciation started slowing from October.

The statistics office said last week it will resume publishing annual inflation data in March. The agency still releases the consumer-price index every month, making it possible to calculate a year-on-year rate.

The monetary policy committee, which was established in September, kept its key interest rate at 35% in Monday. It said it expects month-on-month inflation, which slowed to an 11-month low of 2.2% in January, to be well below 5% by the end of the year.

To contact the reporter on this story: Godfrey Marawanyika in Harare at gmarawanyika@bloomberg.net

To contact the editors responsible for this story: Gordon Bell at gbell16@bloomberg.net, Rene Vollgraaff, Hilton Shone

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