Zimbabwe's deflation softens

Zimbabwe's deflation softens
Published: 16 June 2014
Zimbabwe's deflation softened with the annual inflation rate gaining 0,07 percentage points to minus 0,19 percent in May on the back of a rise in revenue inflows from tobacco export receipts.

According to data from the Zimbabwe National Statistics Agency (Zimstat), Zimbabwe's year on year inflation improved from minus 0,26 percent in April to minus 0,19 percent in May this year.

Zimbabwe entered deflation in February as liquidity conditions tightened while aggregate demand kept declining due to lower disposable incomes.

An economist Mrs Letina Undenge says there is need to mobilise fresh capital in the economy to boost productivity.

"We anticipate more to be done. However, the only attempt is to control deflation by focusing on mechanisms to boost aggregate demand," said Mrs Undenge.

Tight liquidity amid ever increasing closure of companies has negatively impacted on disposable incomes, which in turn has resulted in lower demand for goods, throwing the economy into deflation.

Economists warn deflation is hard to reverse as it calls for stimulant packages to boost aggregate demand.
- zbc


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