Off the wire
• UN chief appeals for seizing opportunity of talks to solve Syrian crisis  • Iranians celebrate "fire festival" as new year looms  • No indication of terrorism involved in German car blast: police  • Feature: 2 mln birds illegally killed in Cyprus in 2015: wild life organizations  • Pakistani army chief confirms death sentence to 13 "hardcore terrorists"  • UNHCR special envoy Angelina Jolie visits Syrian refugees in Lebanon  • Commentary: China-Myanmar ties remain promising with election of new president  • Malaga coach Gracia agrees next contract with the club  • Hamburg's Josip Drmic ruled out for the rest of the season  • Barca boss says work still to be done against Arsenal  
You are here: 　 Home

Zimbabwe marks 16th month in deflation

Xinhua, March 16, 2016 Adjust font size:

Zimbabwe on Tuesday marked 16 months in deflation after annual inflation for February closed at -2.22 percent.

The inflation rate was 0.03 percent down from -2.19 percent in January, pushed by a decline in health prices as well as electricity, gas and other fuels, said the national statistics agency (Zimstat).

The country first slid into deflation in February 2014, staying negative for five months in succession as prices fell due to a cash crunch, but prices recovered marginally, causing inflation to go into the positive territory from July only to fall back into deflation in November 2014, a trend that has persisted up to now.

This was after the country grappled with hyperinflation that decimated the national currency in 2008.

Inflation only stabilized after the government dumped the local currency in favor of multiple currencies, dominated by the U.S. dollar, in 2009, but a slowdown in the economy has seen the country sliding into deflation.

Analysts cite subdued aggregate demand, tight liquidity conditions, depressed international oil prices, and weaker currencies against the U.S. dollar, the main currency in use in Zimbabwe, for the negative inflation.

The Reserve Bank of Zimbabwe in its January 2016 monetary policy statement also blamed externalization of funds for the tight liquidity conditions which in turn were suppressing aggregate demand.

It said 1.8 billion U.S. dollars was externalized by both individuals and firms in 2015.

"Circulating this liquidity within the national economy has a great multiplier effect and has a positive contribution to boosting aggregate demand," the central bank said.

Meanwhile, the statistical agency said monthly inflation for February stood at -10 percent after shedding 0.05 percentage points from 0.05 percent the previous month.

The government has forecast inflation to hover around -1.6 percent by end of 2016. Endit