The Reserve Bank of Zimbabwe (RBZ) has forecast that inflation will fall below 5% by December, despite challenges such as a rising import bill and fluctuations in commodity prices.
In October, consumer prices surged by 37.2%, driven largely by a sharp depreciation of the Zimbabwe Gold (ZWG) currency.
However, in an interview with the Zimbabwe Independent, RBZ Deputy Governor Innocent Matshe expressed confidence that inflation will soon stabilise and return to acceptable levels. Said Matshe:
So really, as an economy, we should not panic because there is this huge jump in inflation.
But what we should do is take lessons from it. Because really, in terms of the aggregate inflation, it has risen to about 7,3% and we projected that by December the inflation rate should be below 5%.
We have a huge import bill of grain because of the El Niño-induced drought. We have had a huge knock given the fall in commodity prices.
We are a commodity exporter. So, we had a huge fall in commodity prices.
Matshe explained that because the Zimbabwe Gold (ZWG) currency is backed by gold, an increase in gold prices will ultimately help stabilise the currency. He said:
We are not so far off. We know that there has been an uptick this month (in terms of inflation). There will be moderation next month, but there will be a fall going forward to within the 5% that we projected. So, everything is under control.
Obviously, that will have an impact, but we think that impact (will be) moderate because one of the key commodities in our reserves basket, which is gold, its price is going up.
It is actually approaching record highs if it’s not at record highs already. So, there will be a moderation.
