Consumer Price Index

The Consumer Price Index (CPI) is a measure of the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services.[1] On 25 January 2021 the Zimbabwe National Statistics Agency (ZIMSTAT) announced that from January 2021 the CPI figures will be published the same month unlike in the past when they were published 30 days after the month ended.

Background

The CPI is an index that measures the rate at which the prices of consumption goods and services are changing from month to month (or from quarter to quarter). The prices are collected from shops or other retail outlets. The usual method of calculation is to take an average of the period-to-period price changes for the different products, using as weights the average amounts that households spend on them. CPIs are official statistics that are usually produced by national statistical offices, ministries of labour or central banks. They are published as quickly as possible, typically about ten days after the end of the most recent month or quarter.[2]

A consumer price index (CPI) measures changes in the prices of goods and services that households consume. Such changes affect the real purchasing power of consumers’ incomes and their welfare. As the prices of different goods and services do not all change at the same rate, a price index can only reflect their average movement. A price index is typically assigned a value of unity, or 100, in some reference period and the values of the index for other periods of time are intended to indicate the average proportionate, or percentage, change in prices from this price reference period

Importance of CPI

A CPI measures the rate of price inflation as experienced and perceived by households in their role as consumers. It is also widely used as a proxy for a general index of inflation for the economy as a whole, partly because of the frequency and timeliness with which it is produced. It has become a key statistic for purposes of economic policy-making, especially monetary policy. It is often specified in legislation and in a wide variety of private contracts as the appropriate measure of inflation for the purposes of adjusting payments (such as wages, rents, interest and social security benefits) for the effects of inflation. It can therefore have substantial and wide-ranging financial implications for governments and businesses, as well as for households.

The New Consumer Price Index in Zimbabwe

With effect from March 2019 Zimbabwe National Statistics Agency (ZIMSTAT) was publishing the new Consumer Price Index (CPI) with new weights and a classification. The use of a Classification of Individual Consumption by Purpose (COICOP) resulted in the creation of a new classification which resulted in coming up with 83 classes, 41 groups and 12 divisions. The number of items in the CPI basket is 495.

The implementation of the COICOP classification is also part of the harmonisation project of Consumer Price Indices in different regions like the SADC region. All member states are supposed to adopt the new procedure to enable inter country comparisons of the CPI and the rate of inflation. The new weights were therefore applicable from February 2019 onwards.[3]

Developments on Published CPI Indices in Zimbabwe

The Zimbabwe statistical office announced in August 2020 that commencing from June 2020 they were now publishing blended inflation and Consumer Price Index (CPI). This entails the blending of the inflation for prices that are quoted in US dollars (US$) and inflation for prices quoted in ZWL. This follows the promulgation of Statutory Instrument 185 of 2020 which allowed entities to quote and sell goods and services in both US$ and ZWL.[4]

With effect from June 2020 ZIMSTAT was publishing the new Consumer Price Index (CPI) code named Blended Consumer Price Index. It measures the combined price changes of goods and services in both the USD and ZWL. Two separate indices were computed, that is, the USD Consumer Price Index and the already available ZWL Consumer Price Index. The original CPI weights were splitted into USD and ZWL components using linking factors. These linking factors were the proportions of estimated household expenditures in USD and ZWL according to COICOP classification. The resultant weights were then used to combine the two indices to come out with the blended index.

Zimbabwe's Blended Inflation Confusion

Government’s decision to allow entities to quote and sell goods and services in the United States dollar and the local unit has triggered confusion on which inflation index to use by companies preparers of accounts and investors. ZIMSTATS, the government’s agency tasked with producing inflation figures, has been publishing Blended Inflation and Consumer Price Index (CPI), following the promulgation of Statutory Instrument 185 of 2020, which allowed entities to quote and sell goods and services in both US$ and ZWL$.

The blended inflation, entails a combination of inflation for prices that are quoted in US$ and inflation for prices quoted in ZWL$. Zimbabwe has been experiencing significant hyperinflation and the functional currency affected most is the Zimbabwe dollar. This has confused the market on what functional currency to use for reporting.

The Institute of Chartered Accountants of Zimbabwe (ICAZ), issued a guideline following the confusion in the market. ICAZ said entities that see an increase in US$ transactions over ZWL$ transactions will need to do an assessment of whether their functional currency has changed from ZWL$ to US$ in accordance with International Accounting Standard (IAS) 21 on the effects of changes in foreign exchange rate.

It also highlighted that selection and use of the general price index in the restatement of financial statements in accordance with IAS 29 requires the use of a general price index that reflects changes in general purchasing power.[5]

In Zimbabwe, the currency which was assessed to be in hyperinflation is the ZWL$ while the US$ is not and accountants do not need to do an assessment because this does not concern them.

“Entities that still use the ZWL$ as the functional currency should continue to use CPI and not a blended CPI in the preparation of inflation adjusted financials.

“A blended inflation adjustment index is not appropriate in the preparation of inflation adjusted financial statements as the financials are prepared in a particular functional currency (either ZWL$ or US$) and not reported in a blended currency,” ICAZ said.

CPI Statistics in Zimbabwe

August 2021 Inflation Rate

Blended Consumer Price Index

  • The month on month inflation rate in August 2021 was 1.32 % gaining 0.65 percentage points on the July 2021 rate of 0.65 %.
  • The year on year inflation rate (annual percentage change) for the month of August 2021 as measured by the all items #BCPI stood at 21.50 %.
  • The #BCPI for the month ending August 2021 stood at 123.21 compared to 121.61 in July 2021 and 101.41 in August 2020.

Consumer Price Index

  • The month on month inflation rate in August 2021 was 4.18 % gaining 1.62 percentage points on the July 2021 rate of 2.56 %.
  • The year on year inflation rate (annual percentage change) for the month of August 2021 as measured by the all items #CPI stood at 50.24 %.
  • The #CPI for the month ending August 2021 stood at 3,191.05 compared to 3,062.93 in July 2021 and 2,123.97 in August 2020.

July 2021 Inflation Rate

Blended Consumer Price Index

  • The month on month inflation rate in July 2021 was 0.67 % shedding 3.82 percentage points on the June 2021 rate of 4.49 %.
  • The year on year inflation rate (annual percentage change) for the month of July 2021 as measured by the all items #BCPI stood at 21.61 %.
  • The #BCPI for the month ending July 2021 stood at 121.61 compared to 120.80 in June 2021 and 100.00 in July 2020.

Consumer Price Index

  • The month on month inflation rate in July 2021 was 2.56 % shedding 1.32 percentage points on the June 2021 rate of 3.88 %.
  • The year on year inflation rate (annual percentage change) for the month of July 2021 as measured by the all items #CPI stood at 56.37 %.
  • The #CPI for the month ending July 2021 stood at 3,062.93 compared to 2,986.44 in June 2021 and 1,958.72 in July 2020.

June 2021 Inflation Rate

Blended Consumer Price Index

  • The month on month inflation rate in June 2021 was 4.49 % gaining 2.69 percentage points on the May 2021 rate of 1.80 %.
  • The year on year inflation rate (annual percentage change) for the month of June 2021 as measured by the all items #BCPI stood at 40.91 %.
  • The #BCPI for the month ending June 2021 stood at 120.80 compared to 115.61 in May 2021 and 85.73 in June 2020.

Consumer Price Index

  • The month on month inflation rate in June 2021 was 3.88 % gaining 1.34 percentage points on the May 2021 rate of 2.54 %.
  • The year on year inflation rate (annual percentage change) for the month of June 2021 as measured by the all items #CPI stood at 106.64 %.
  • The #CPI for the month ending June 2021 stood at 2,986.44 compared to 2,874.85 in May 2021 and 1,445.21 in June 2020.

May 2021 Inflation Rate

Blended Consumer Price Index

  • The month on month inflation rate in May 2021 was 1.80 % gaining 0.86 percentage points on the April 2021 rate of 0.94 %.
  • The year on year inflation rate (annual percentage change) for the month of May 2021 as measured by the all items #BCPI stood at 74.57 %.
  • The #BCPI for the month ending May 2021 stood at 115.61 compared to 113.57 in April 2021 and 66.23 in May 2020.

Consumer Price Index

  • The month on month inflation rate in May 2021 was 2.54 % gaining 0.96 percentage points on the April 2021 rate of 1.58 %.
  • The year on year inflation rate (annual percentage change) for the month of May 2021 as measured by the all items #CPI stood at 161.91 %.
  • The #CPI for the month ending May 2021 stood at 2,874.85 compared to 2,803.57 in April 2021 and 1,097.65 in May 2020.

April 2021 Inflation Rate

Blended Consumer Price Index

  • The month on month inflation rate in April 2021 was 0.94 % shedding 0.15 percentage points on the March 2021 rate of 1.09 %.
  • The year on year inflation rate (annual percentage change) for the month of April 2021 as measured by the all items #BCPI stood at 94.70 %.
  • The #BCPI for the month ending April 2021 stood at 113.57 compared to 112.51 in March 2021 and 58.33 in April 2020.

Consumer Price Index

  • The month on month inflation rate in April 2021 was 1.58 % shedding 0.67 percentage points on the March 2021 rate of 2.25 %.
  • The year on year inflation rate (annual percentage change) for the month of April 2021 as measured by the all items #CPI stood at 194.07 %.
  • The #CPI for the month ending April 2021 stood at 2,803.57 compared to 2,759.83 in March 2021 and 953.36 in April 2020.

March 2021 Inflation Rate

Blended Consumer Price Index

  • The month on month inflation rate in March 2021 was 1.09 % gaining 0.38 percentage points on the February 2021 rate of 0.71 %.
  • The year on year inflation rate (annual percentage change) for the month of March 2021 as measured by the all items #BCPI stood at 122.33 %.
  • The #BCPI for the month ending March 2021 stood at 112.51 compared to 111.30 in February 2021 and 50.60 in March 2020.

Consumer Price Index

  • The month on month inflation rate in March 2021 was 2.26 % shedding 1.19 percentage points on the February 2021 rate of 3.45 %.
  • The year on year inflation rate (annual percentage change) for the month of March 2021 as measured by the all items #CPI stood at 240.55 %.
  • The #CPI for the month ending March 2021 stood at 2,759.83 compared to 2,698.89 in February 2021 and 810.40 in March 2020.

February 2021 Inflation Rate

Blended Consumer Price Index

  • The month on month inflation rate in February 2021 was 0.71 % shedding 2.05 percentage points on the January 2021 rate of 2.76 %.
  • The year on year inflation rate (annual percentage change) for the month of February 2021 as measured by the all items #BCPI stood at 162.95 %.
  • The #BCPI for the month ending February 2021 stood at 111.30 compared to 110.52 in January 2021 and 42.33 in February 2020.

Consumer Price Index

  • The month on month inflation rate in February 2021 was 3.45 % shedding 1.98 percentage points on the January 2021 rate of 5.43 %.
  • The year on year inflation rate (annual percentage change) for the month of February 2021 as measured by the all items #CPI stood at 321.59 %.
  • The #CPI for the month ending February 2021 stood at 2,698.89 compared to 2,608.79 in January 2021 and 640.16 in February 2020.

January 2021 Inflation Rate

Blended Consumer Price Index

  • The month on month inflation rate in January 2021 was 2.76 % gaining 0.01 percentage points on the December 2020 rate of 2.75 %.
  • The year on year inflation rate (annual percentage change) for the month of January 2021 as measured by the all items #BCPI stood at 191.52 %.
  • The #BCPI for the month ending January 2021 stood at 110.52 compared to 107.55 in December 2020 and 37.91 in January 2020.

Consumer Price Index

  • The month on month inflation rate in January 2021 was 5.43 % shedding 1.21 percentage points on the December 2020 rate of 4.22 %.
  • The year on year inflation rate (annual percentage change) for the month of January 2021 as measured by the all items #CPI stood at 362.63 %.
  • The #CPI for the month ending January 2021 stood at 2,608.79 compared to 2,474.51 in December 2020 and 563.90 in January 2020.

December 2020 Inflation Rate

Blended Consumer Price Index

  • The month on month inflation rate in December 2020 was 2.75 % gaining 0.50 percentage points on the November 2020 rate of 2.25 %.
  • The year on year inflation rate (annual percentage change) for the month of December 2020 as measured by the all items #BCPI stood at 188.91 %.
  • The #BCPI for the month ending December 2020 stood at 107.55 compared to 104.67 in November 2020 and 37.23 in December 2019.

Consumer Price Index

  • The month on month inflation rate in December 2020 was 4.22 % shedding 1.07 percentage points on the November 2020 rate of 3.15 %.
  • The year on year inflation rate (annual percentage change) for the month of December 2020 as measured by the all items #CPI stood at 348.59 %.
  • The #CPI for the month ending December 2020 stood at 2,474.51 compared to 2,374.24 in November 2020 and 551.63 in December 2019.

November 2020 CPI

Blended Consumer Price Index

  • The month on month inflation rate in November 2020 was 2.25 % gaining 0.82 percentage points on the October 2020 rate of 1.43 %.
  • The year on year inflation rate (annual percentage change) for the month of November 2020 as measured by the all items #BCPI stood at 214.99 %.
  • The #BCPI for the month ending November 2020 stood at 104.67 compared to 102.37 in October 2020 and 33.23 in November 2019.

Consumer Price Index

  • The month on month inflation rate in November 2020 was 3.15 % shedding 1.22 percentage points on the October 2020 rate of 4.37 %.
  • The year on year inflation rate (annual percentage change) for the month of November 2020 as measured by the all items #CPI stood at 401.66 %.
  • The #CPI for the month ending November 2020 stood at 2, 374.24 compared to 2, 301.67 in October 2020 and 473.28 in November 2019.

October 2020 CPI

Blended Consumer Price Index

  • The month on month inflation rate in October 2020 was 1.43% gaining 1.90 percentage points on the September 2020 rate of -0.47%
  • The year on year inflation rate (annual percentage change) for the month of October 2020 as measured by all items blended #CPI stood at 249.63%
  • The blended #CPI for the month ending October 2020 stood at 102.37 compared to 100.93 in September 2020 and 29.28 in October 2019.

Consumer Price Index

  • The month on month inflation rate in October 2020 was 4.37% gaining 0.54 percentage points on the September 2020 rate of 3.83%
  • The year on year inflation rate (annual percentage change) for the month of October 2020 as measured by all items #CPI stood at 471.25%
  • The #CPI for the month ending October 2020 stood at 2,301.67 compared to 2,205.24 in September 2020 and 402.92 in October 2019'.

September 2020 CPI

  • The month on month inflation rate in September 2020 was 3.83% shedding 4.61 percentage points on the August 2020 rate of 8.44%
  • The year on year inflation rate (annual percentage change) for the month of September as measured by all items #CPI stood at 659.40%
  • The #CPI for the month ending September 2020 stood at 2,205.24 compared to 2,123.97 in August 2020 and 290.39 in September 2019.[6]

August 2020 CPI

  • The month on month inflation rate in August 2020 was 8.44% shedding 27.09 percentage points on the July 2020 rate of 35.53%
  • The year on year inflation rate (annual percentage change) for the month of August as measured by all items #CPI stood at 761.02%
  • The #CPI for the month ending August 2020 stood at 2,123.97 compared to 1,958.72 in July 2020 and 246.68 in August 2019.[7]

July 2020 Inflation Rate

  • The month on month inflation rate in July 2020 was 35.53% gaining 3.87 percentage points on the June 2020 rate of 31.66%
  • The year on year inflation rate (annual percentage change) for the month of July as measured by all items #CPI stood at 837.53%
  • The #CPI for the month ending July 2020 stood at 1,958.72 compared to 1,445.21 in June 2020 and 208.92 in July 2019.[7]

June 2020 Inflation rate

  • Zimbabwe’s annual inflation rate for June slowed down from 785.55% in May to 737.26% while month-on-month, the inflation rate in June was 31.66%, up 16.43 percentage points on May‘s rate of 15.23%.
  • In a statement posted on its Twitter account, the Zimbabwe National Statistics Agency (Zimstat) also indicated that the Consumer Price Index (CPI) for the month ending June 2020 stood at 1,445.21, up from 1,097.65 in May 2020.

Blended CPI for June 2020

  • The month on month inflation rate in June 2020 was 29.44% gaining 15.91 percentage points on the May rate of 13.53%
  • The year on year inflation rate (annual percentage change)for the month of June 2020 as measured by all items #blendedCPI stood at 457.19%
  • The #blendedCPI for the month ending June 2020 stood at 557.19 compared to 430.45 in May 2020 and 100.00 in June 2019.[8]

May 2020 Inflation rate

  • The month on month inflation rate in May 2020 was 15.13% shedding 2.51 percentage points on the April rate of 17.64%.
  • The year on year inflation rate (annual percentage change) for the month of May 2020 as measured by all items #CPI stood at 785.55%
  • The #CPI for the month ending May 2020 stood at 1,097.65 compared to 953.36 in April 2020 and 123.95 in May 2019[9]

References

  1. [1], U.S. Bureau of Labor Statistics, Published: 13 October, 2020, Accessed: 13 October, 2020
  2. [2], International Labour Organisation, Accessed: 13 October, 2020
  3. [3], Zimbabwe National Statistics Agency, Published: 17 August, 2020, Accessed: 13 October, 2020
  4. [4], Institute of Chartered Accountants of Zimbabwe, Published: August 2020, Accessed: 13 October, 2020
  5. Phillimon Mhlanga, [5], Business Times, Published: 7 October, 2020, Accessed: 13 October, 2020
  6. Kudzai Mutisi, [6], Twitter, Published: 13 October, 2020, Accessed: 13 October, 2020
  7. 7.0 7.1 [7], Zimbabwe National Statistics Agency, Published: 15 August, 2020, Accessed: 16 August, 2020
  8. [8], Zimbabwe National Statistics Agency (ZIMSTAT), Published: 14 July, 2020, Accessed: 14 July, 2020
  9. [9], Zimstat, Published: 16 June, 2020, Accessed: 17 June, 2020