Blended inflation concept takes effect

Story by Davison Vandira

ECONOMIC analysts have come in support of the rationale behind the introduction of the blended inflation concept, which is being driven by the dual currency system, which is operational in the country.

The country last week moved away from announcing inflation figures in Zimbabwe Dollar terms as well as in United States Dollar terms, by adopting a blended inflation concept.

The concept was operationalised through Statutory Instrument 27 of 2023, with latest figures showing that year on year inflation for the month of February stood at 92.3 percent, while the month on month was in the negative at -1.6 percent, reflecting a significantly stable environment.

Economic analysts have weighed in to support the adoption of the blended inflation concept as a real indicator of the country’s inflation figures.

Investment Analyst Mr Batanai Matsika said, ‘‘From an economic perspective I think the concept of Blended Inflation reflects rationality on the part of monetary authorities as they realised that we are in a multi currency system as such it is critical to factor in all the pricing differences that are being used in the economy particularly between the United States Dollar and the Zimbabwe Dollar which are the dominant currencies in use in the economy.’’

Economic Analyst Mr Kudakwashe Mugova noted, ‘‘From a business point of view, it is a welcome development to have this blended inflation as it will reconfigure lending rates to reflect the largely dollarised economy and after the promulgation of Statutory Instrument 27 of 2023 it is now incumbent upon financial institutions to factor in this monetary change into their transactions as well and this goes along with the rest of the economy.’’

Zimbabwe’s monetary and fiscal authorities are on a mission to deepen the macroeconomic stability in the country characterised by low inflation levels as well as stable exchange rates.

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