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Cost of living rises as Zimdollar slips

Source: Cost of living rises as Zimdollar slips –Newsday Zimbabwe

THE cost of living has risen by a further 4,8% to ZWL$95 462,53 per person in September as the Zimbabwe dollar continues to depreciate against the greenback leading to relentless price hikes, official statistics show.

This comes as the Zimbabwe dollar has depreciated by about 18% and 23% on the official and parallel foreign currency markets, respectively, against US dollar since last month.

On August 22, a day before the general elections, the official forex rate stood at US$1:ZWL$4 568,38 while the parallel rate was US$1:ZWL$6 500.

But, as of yesterday, the local currency was trading against the US dollar at US$1:ZWL$5 382,86 and US$1:ZWL$8 000 on the official and parallel markets, respectively.

To preserve value, businesses and service providers are keeping the prices of goods and services high in line with the Zimbabwe dollar’s performance.

In the newly-released statistics, the Zimbabwe National Statistics Agency (ZimStat) said the Total Consumption Poverty Line (TCPL) increased by 4,8% while the Food Poverty Line (FPL) rose by 3,9%.

“The Food Poverty Line (FPL) in September 2023 rose by 3,9% to $73, 235,85 from $70, 460,81 in August 2023. The Total Consumption Poverty Line for Zimbabwe was $95,462,53 per person in September 2023 representing an increase of 4,8% when compared to the August 2023 figure of $91,063,30,” ZimStat said.

However, both the TCPL and FPL are based on a 2 100-calorie daily intake that ZimStat calls standard though dieticians point out that this greatly differs per person based on habits, routines and exercise.

ZimStat also indicated that food and education have been mostly hit hard by inflation, with prices of these items rising by 0,33% and 0,25%, respectively.

 “The major drivers of the September 2023 month-on-month inflation rate of 1,0% were food and non-alcoholic beverages (0,33%) and education (0,25%) and communication (0,15%),” it said.

The statistics agency further said the year-on-year inflation rate stood at 18,4% for September.

However, this inflation data is based on a new method of calculating the inflation rate.

According to the agency, previously, it used an arithmetic aggregation method but is now using a geometric aggregation method. This is because the agency recorded that 80% of transactions for the month were in US dollars while the rest was in local currency.

“Inflation rate of the month of September 2023 rose by 2,3% percentage points from -1,3% in August 2023 to current 1,0%.

“The rise implies that prices, as measured by the All-items Consumer Price Index (CPI), increased by an average of 1,0%  between August 2023 and September 2023.

“Looking at the year-on-year inflation rate, prices as measured by all-items CPI increased by an average of 18,4% between September 2022 and September 2023.”

ZimStat also announced that the consumer price index was 100,95 in September 2023, 100 in August and 85,29 in September 2022.

“The CPI for education had the highest month-on-month inflation rate of 6,0% followed by communication at 5,8%,” ZimStat added.

Meanwhile, economist Yona Menon Banda said inflation was rising due to the ever weakening local currency.

“I think it’s mostly the effect of the sustained depreciation of our domestic currency with retailers continuously adjusting their prices to preserve their real earnings,” Banda said.

Measures put in place by the government to tame inflation were projected to restore the value of Zimdollar.

This is mostly being done through mopping up excess liquidity as well as making most fees and taxes payable in local currency.

Meanwhile, ZimStat director-general Taguma Mahonde who was arrested recently on allegations of obstructing the course of justice, fraud and corruption has been remanded in custody until Tuesday for bail ruling.