Inflation 2023 - Zimbabwe

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From April 2023, the cost of goods, especially in Zimbabwe Dollars (RTGS $), began to rise, and then rise dramatically.

See: Value Of Zimbabwe Dollar, (from 1980)
Black Friday.
Price Controls in Zimbabwe and Bond Notes.
Economic Crisis in Zimbabwe. (2000 to 2008).
Bank Rate in Zimbabwe, Monetary Policy.
Disposable Income.
Zimbabwe Inflation Rates.
Consumer Price Index (CPI), then Blended Inflation and Consumer Price Index (CPI).
Zimbabwe Monetary Policy.

Inflation Rate

The inflation rate is the percentage increase or decrease in prices during a specified period, usually a month or a year. The percentage tells you how quickly prices rose during the period. For example, if the inflation rate for a gallon of gas is 2% per year, then gas prices will be 2% higher next year. [1]

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. [2]

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.


Causes According to Economic Theory

From Zimbabwe Inflation Rates, there are two causes of inflation. The most common is demand-pull inflation. That's when demand outpaces supply for goods or services. Buyers want the product so much that they're willing to pay higher prices.
Cost-push inflation is the second, less common, cause. That's when supply is restricted but demand is not. This is well illustrated by The Diamond-Water Paradox - Adam Smith described this problem in The Wealth of Nations by comparing the high value of a diamond, which is unessential to human life, to the low value of water, without which humans would die.

Some sources say that an increase in the money supply also causes inflation (a misinterpretation of monetarism theory). This says the primary cause of inflation is the printing (or 'creation' in a digital economy) of too much 'money' by the government. (This can also be illustrated in the Diamond-Water paradox, diamonds are scarce, water is not.) As a result, too much capital chases too few goods. It creates inflation by triggering either demand-pull or cost-push inflation.

Some also count built-in inflation as a third cause. This factors people’s expectations of future inflation. When prices rise, labor expects an increase in wages to keep up. But higher wages raises the cost of production, which raises prices of goods and services again. When this cause-and-effect continues, it becomes a wage-price spiral.

Foreign Exchange Auction System

Foreign Exchange Auction System is a system whereby the RBZ regularly sells a given amount of foreign exchange through a bidding process and buys foreign exchange in the intervening periods at the previous auction-determined rate. It is important to place the exchange auction in the context of the alternative exchange rate regimes that can be adopted to resolve an exchange crisis and to restore a cushion of international reserves. The first was conducted on 23 June 2020.

Statutory Instrument 185 of 2020

Statutory Instrument 185 of 2020 allowed entities to quote and sell goods and services in both US$ and ZWL$. [3]

SI 127 of 2021

SI 127 of 2021, known as the Presidential Powers (Temporary Measures) (Financial Laws Amendment) Regulations, 2021 was gazetted on 28 May 2021. It detailed civil penalties for all economic agents that disregard the Banking and Use Promotion Act (24:24) as well as the Foreign Exchange Act (22:05).
According to SI 127 of 2021, businesses that access foreign currency on the Foreign Exchange Auction System and then proceed to peg prices using parallel market rates may face a maximum fine of ZW$50 000.


Two "internet" definitions term Hyperinflation:

Hyperinflation is generally defined as price increases of 50% or more per month, but in the worst-known cases prices have doubled in days or hours. Hyperinflation happens only when people lose all confidence in a government and its institutions, usually in the aftermath of political or economic upheaval.

Hyperinflation is a term to describe rapid, excessive, and out-of-control general price increases in an economy. While inflation measures the pace of rising prices for goods and services, hyperinflation is rapidly rising inflation, typically measuring more than 50% per month.

The methods being used to measure inflation by the government are criticized, and dismissed as not showing the true picture.


March 2023

It was announced in March 2023 by Mthuli Ncube that inflation will be measured using a weighted average of items priced in Zimbabwean dollars and United States dollars, According to Statutory Instrument 27 of 2023. ‘rate of inflation’ means the general increase in price levels of goods and services measured as a weighted average based on the use of Zimbabwean dollars and United States dollars over a given period of time.”

Using the blended rate, the Zimbabwe National Statistics Agency (ZIMSTAT) said the year-on-year inflation for February 2023 was 92.3% and 101.5% in January. Previously the rate of inflation was based only on items in Zimbabwean dollars, so inflation was 229.8% in January and 243.8% in December.

The government reintroduced the Zimbabwean dollar in 2019 after a decade of dollarisation. In 2020, the multi-currency system was re-introduced and since then, the United States dollar has progressively become the dominant currency in domestic transactions, with USD usage over 75 percent in the economy. In 2022, the government said the multi-currency system would be maintained for a further five years.

May 2023

In May 2023, Zimbabwe’s month-on-month inflation rose to 15.7 percent. The year-on-year inflation rose to 86.5% in May from 75.6% in April. Reported by Zimbabwe National Statistics (ZIMSTAT) director-general Taguma Mahonde.

The month-on-month inflation rate is given by the percentage change in the index of the relevant month compared with the index of the previous month. In March 2023, Minister of Finance and Economic Development Mthuli Ncube announced that inflation will be measured using a weighted average of items priced in Zimbabwean dollars and United States dollars. Previously the rate of inflation was based only on items in Zimbabwean dollars. Former Finance Minister Tendai Biti has said the move by the government to measure inflation using a weighted average of items priced in Zimbabwean dollars and United States dollars is insincere and an attempt to conceal rising inflation. [4]

Finance Minister, Mthuli Ncube was challenged in Parliament in May 2023 to provide a detailed explanation before Parliament about Statutory Instrument 127 and blended inflation. Speaker of the National Assembly Jacob Mudenda said Ncube should appear before Parliament to explain SI 127.

SI 127 of 2021 amends the Exchange Control Act and the Bank Use Promotion Act, imposing heavy administrative penalties for breaches of special provisions of the Act. The SI prohibits businesses from selling goods and services or quoting them at an exchange rate above the foreign currency auction system rate. It also punishes businesses for issuing clients with Zimbabwean dollar receipts for payment received in foreign currency. The SI has been viewed as an attempt to curtail the exchange rate on the parallel market to stabilize the local currency. However, business leaders view it as a regulation that could lead to shortages of goods and akin to price controls (cost-push inflation).

Blended inflation is a method used to calculate inflation by taking into account both foreign and domestic currencies in countries with multiple currencies in circulation. The Reserve Bank of Zimbabwe uses this method to measure the rate of inflation by converting prices of goods and services into a common currency, such as the US dollar. The prices are then aggregated and weighted to calculate inflation. Although blended inflation is considered more accurate than using a single currency, it can also mask the impact of inflation on specific sectors of the economy, which can lead to a distortion in the inflation data. Therefore, the use of blended inflation can be controversial. [5]

June 2023

The Consumer Council of Zimbabwe low-income urban earner monthly basket for a family of six rose from $611 275 in April to $1 015 962.61 in May 2023. This is a cost of living increase by 62% between April and May in Zimbabwe dollar terms. During the same period, the prices of goods and services in United States dollars went down by 31.4 %. This information comes from CCZ director Rosemary Mpofu.

The Zimbabwe dollar fell by nearly 60% on the official market. The local currency fell from US$1: ZWL$2 577 set by the central bank on 30 May 2023 to ZWL$3 673 in the first week of June. The latest statistics by the Zimbabwe National Statistics Agency (ZIMSTAT) indicate that the annual inflation rose by 11.3 percentage points from April to 86.5% in May. Steve Hanke, a professor of Applied Economics at Johns Hopkins University, argues that Zimbabwe’s inflation is at 717 %. [6]


  1. Kimberly Amadeo, [1], The Balance, Published: 7 April, 2020, Accessed: 17 June, 2020
  2. [2], U.S. Bureau of Labor Statistics, Published: 13 October, 2020, Accessed: 13 October, 2020
  3. Esther Mapungwana, [3], Zimbabwe Independent, Published: 12 February, 2021, Accessed: 9 March, 2021
  4. Monthly Inflation Rate Jumped To 15.7% In May - ZIMSTAT, Pindula, Published: 27 May 2023, Retrieved: 9 June 2023
  5. Biti Challenges Ncube To Explain SI 127 And Blended Inflation In Parliament, Pindula, Published: 23 May 2023, Retrieved: 9 June 2023
  6. Family Basket Jumps To $1 Million Per Month - CCZ, Pindula, Published: 7 June 2023, Retrieved: 14 June 2023

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