Zimbabwe’s inflation rose to 37.2% from 5.8% a month earlier, the Zimbabwe National Statistics Agency said in an online briefing.
This is the third consecutive month that prices have increased in the southern African nation since the introduction of the ZiG, short for Zimbabwe Gold, in early April 2024. But the scale of the rise was much larger after the currency’s official exchange rate against the dollar was slashed.
INTRODUCING | Zimbabwe Introduces Zim Gold, the New Currency Backed by Gold and Precious Minerals – https://t.co/ncKtxrEzpg
— Jack Straw (@JackStr42679640) April 8, 2024
The Reserve Bank of Zimbabwe devalued the Zig by 43% in September 2024 after the gap between the official and unofficial exchange rates significantly widened, in part due to dollar shortages caused by increased food imports because of a severe drought in southern Africa.
INFLATION | Zimbabwe Devalues the ZiG Local Currency in Response to Rising Demand for Dollars
Monthly inflation accelerated to 5.8% in September 2024, up from 1.4% in August 2024.https://t.co/Hy1xbI3iX9 $ZiG #Zimbabwe #Inflation #Africa pic.twitter.com/GYlcZJA8SN
— BitKE (@BitcoinKE) September 30, 2024
While the central bank’s monetary policy committee did not explicitly state that it was devaluing the ZiG, Governor John Mushayavanhu indicated that the bank was implementing several measures to curb inflation, including permitting ‘greater exchange rate flexibility’ to address the rising demand for foreign currency in the country.
Following the ZiG devaluation, the Zimbabwe Electricity Supply Authority and mobile network operators have raised tariffs in terms of the local currency, reported Bloomberg.
Earlier this month, the government provided state employees with a $40 pay raise in local currency to help offset the impact of the devaluation, according to Sifiso Ndlovu, CEO of the Zimbabwe Teachers’ Association. However, he noted that the increase has already ‘lost value’ as the gap between the parallel market rate and the official rate has grown.
On October 25 2024, the ZiG was trading at 27.69 per dollar on the official market, as per data from the central bank’s website. However, on the street market, it was quoted between 40 and 50 to the dollar, according to ZimPriceCheck.com, a site that monitors official and unofficial exchange rates.
The ZiG, supported by Zimbabwe’s gold and foreign currency reserves, was introduced in early April 2024 to replace the Zimbabwean dollar, which had depreciated by approximately 80% since the beginning of the year. It represents Zimbabwe’s sixth attempt in 15 years to establish a stable local currency.
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