The Confederation of Zimbabwe Industries (CZI) believes that achieving the 60-70% inflation targets set by monetary authorities is practical and attainable. This comes after the Reserve Bank of Zimbabwe (RBZ) revised its annual inflation projection in the Mid-term Monetary Policy Statement (MPS) from 10%-30% by year-end to 60%-70% by the end of 2023.
In response to this development, CZI’s latest report on inflationary trends supports the revised target as achievable. The report highlights that maintaining this target requires disciplined policies concerning money printing, liquidity management, and fiscal spending, as history has shown that policy indiscipline can lead to high inflation.
The CZI also notes that in July 2023, food manufacturers lowered prices by over 23% compared to June 2023, demonstrating a positive response to government policies rather than profit-driven motives. This price reduction trend was observed across various sectors, albeit to different extents.
The CZI attributes the reduction in reliance on the parallel market for sourcing US dollars to the availability of foreign currency on the official market and the scarcity of the local currency. The organization commends the government’s economic measures implemented towards the end of 2023 for contributing to inflation relief.
CZI emphasizes that exchange rate stability, achieved through the convergence of the parallel market and official rates, is now crucial for sustainable stability. It also suggests that if there are no sudden liquidity injections into the market, September 2023’s month-on-month inflation figures are likely to remain in negative territory.