Mthuli Ncube launches new realistic inflation calculation formula, Zim$ and US$ price shifts now captured

Business Reporter

FINANCE Minister, Mthuli Ncube Friday introduced a new realistic inflation calculation method which captures price movement realities as determined by the dual currency nature of the economy.

The measures are enshrined under Statutory Instrument 27 of 2023 now considers price movements margins as reflected by economic reflections.

“In this notice— the  “rate of inflation” means the general increase in price levels of goods and services measured as a weighted average based on the use of Zim$  and US$  over a given period of time.

“Going forward, the dissemination of inflation rates with effect from the date of publication of this notice shall adopt this method of measuring inflation,” the SI said.

The new calculation method is in sync with the country’s clear policy on dual currency use.

The development comes after calls by various stakeholders for the shift from Zim$ based inflation calculations, saying the method is ignoring the dual income nature of the economy, which is now in both Zim$ and US$ from corporate level down to a majority of individuals.

Last year, RBZ deputy governor, Innocent Matshe made the clarion call during a Confederation of Zimbabwe Retailers (CZR) organized post 2023 National Budget Breakfast meeting.

“There is a need to sit down and come up with a realistic inflation measurement method. Currently, we have bank deposits which are 60% in foreign currency and just 40% in Zim$.

“Some workers are even generating income in both US$ and Zim$ but when measuring inflation there is a tendency of zeroing in on the local currency,” he said.