Maravi

(NEWZIMBABWE) Inflation surges to 6.1 percent

Inflation surges to 6.1 percent
by Staff Reporter
16/06/2010 00:00:00

THE Central Statistical Office (CSO) says inflation surged to 6.1 percent year-on-year in May compared with 4.8 percent in April due to rising food prices and transport costs. The CSO data, released on Tuesday showed that on a monthly basis, inflation had quickened to 0.3 percent from 0.1 percent in April.

The figures came a day after the International Monetary Fund (IMF) urged public and private sector workers to exercise wage restraint to avoid pushing the country back into an inflation spiral.

The Ministry of Finance also warned that the gains recorded in the fight against inflation in 2009 were increasingly coming under threat.

“The disinflationary gains of 2009 are now under threat as inflationary pressures started building up during the first quarter of 2010.

“This was largely driven by rising prices for food, non alcoholic beverages, health education and services for public utilities,” the ministry said in its 2010 first quarter treasury bulletin.

The bulletin also attributed the resurgent inflationary pressures to the strengthening of the South African Rand against the US dollar which adversely affects Zimbabwe since the bulk of the country’s imports come from its southern neighbour.

Capacity utilisation in local industries remains constrained forcing the country to rely on imports from South Africa even for basic goods.

The annual inflation figure was firmly in negative territory at - 4.8 percent as recently as January and analysts say the rise in May increases the risk that inflation will be back in double figures by the end of the year.

"We are likely to see inflation rising to double digits for the first time since we started using foreign currencies (in February 2009) and this is because of food price pressures and the heavy reliance on imports," economic commentator John Robertson told Reuters.

Zimbabwe, whose inflation peaked at 500-billion percent in late 2008, has stabilised its economy under the coalition government set up last year by bitter rivals President Robert Mugabe and Prime Minister Morgan Tsvangirai.

Labels: IMF, INFLATION, NEOLIBERALISM

posted by MrK @ 1:23 PM