Zimbabwe’s Monthly Inflation Decline and Economic Policies in February 2025

Zimbabwe’s consumer inflation fell to 0.5% in February 2025, down from 10.5% in January, the lowest in seven months. Price growth slowed in both food and non-food sectors, while the central bank kept its interest rate unchanged at 35%. The ZiG is used in 30% of transactions, despite challenges in the informal market, and companies are required to report in ZiG for auditing purposes.

In February 2025, Zimbabwe experienced a notable decline in monthly consumer inflation, which dropped to 0.5%. This figure marks a significant decrease from January’s inflation rate of 10.5%, representing the lowest rate recorded in seven months. The reduction in price growth is evident in both food and non-food sectors, with food inflation decreasing from 6.8% in January to 0.8%, and non-food items dropping from 4.6% to 0.3%.

On February 6, the Zimbabwean central bank opted to maintain its benchmark interest rate at 35%, marking the second consecutive time it has held steady at this level. The bank’s decision reflects its ongoing commitment to a stringent monetary policy aimed at minimizing market volatility and fostering economic stability. Despite these measures, challenges persist in the informal market, where adherence to currency regulations remains lax.

The Zimbabwean Dollar (ZiG) is utilized in approximately 30% of all transactions within the country, with the remainder predominantly conducted in US dollars. Earlier this month, the Governor of the central bank, John Mushayavanhu, issued a directive for companies listed on the stock exchange to incorporate the ZiG in their reporting processes, effective immediately. This requirement includes its use in the companies’ audited financial statements for the year 2024.

In summary, Zimbabwe’s monthly inflation saw a significant decline in February 2025, settling at 0.5% compared to January’s 10.5%. The central bank’s decision to retain the interest rate at 35% underlines its commitment to curtailing economic volatility, notwithstanding ongoing challenges in the informal market. Continued efforts are being made to increase the use of the ZiG in formal company transactions.

Original Source: www.tradingview.com