Inflation soared in Zimbabwe as the currency collapsed, raising the prices of goods and services and increasing pressure on the central bank to act.
Consumer prices rose at an annual rate of 34.8% in January, up from 26.5% in December, data released by Zimbabwe's National Bureau of Statistics during an online briefing on Monday showed. Prices rose 6.6% in the month compared to 4.7% in December. According to the National Statistical Office, the main drivers of the spike in inflation were food and services such as housing and electricity.
This month's increase is the third in a row since the National Statistical Office changed the price index on September 28 to better reflect the use of the US dollar in the economy. The dollar is used in about 80% of transactions and is preferred over the Zimbabwean dollar, which was reintroduced in 2019 after a 10-year hiatus after hyperinflation wiped out its value. , making the dollar very volatile.
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The local currency has lost 38% of its value against the dollar on official markets this year, and plummeted even further on the streets of the capital Harare. It fell about 85% between early May and late June last year, before exchange liberalization and a government order requiring all corporate taxes to be paid strictly in local currencies spurred a recovery.
Persistence Gwanyanya, a member of the rating committee, said in a post on X on Monday that monetary policy makers will meet on Monday to “intervene to address exchange rate and price instability He said he plans to discuss the matter. Zimbabwe's interest rates are the highest in the world at 130%, followed by Argentina.
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