Zimbabwe Monthly Inflation Declines Significantly in February 2025

Zimbabwe’s monthly inflation decreased to 0.5% in February 2025, down from 10.5% in January. Food inflation fell to 0.8%, and non-food inflation reduced to 0.3%. The central bank held the interest rate stable at 35%. The Zimbabwean Dollar represents 30% of transactions, and Governor John Mushayavanhu mandated its use for financial reporting.

In February 2025, Zimbabwe experienced a significant decline in its monthly consumer inflation rate, which dropped to 0.5%, marking the lowest level in seven months. This decrease is a substantial shift from January’s inflation rate of 10.5%. The slowdown in price growth was evident in both food and non-food items, with food inflation falling to 0.8% from 6.8%, and non-food inflation reducing to 0.3% from 4.6%.

The Reserve Bank of Zimbabwe maintained its benchmark interest rate at 35% for the second consecutive time on February 6, highlighting its commitment to a stringent monetary policy aimed at reducing market volatility. Despite the efforts to stabilize the economy, there are notable challenges in the informal market, where enforcement of currency regulations remains lax. The Zimbabwean Dollar (ZiG) currently represents 30% of all transactions, while the remaining transactions are predominantly executed in United States dollars.

In a recent directive, Governor John Mushayavanhu mandated that companies listed on the stock exchange must utilize the ZiG for reporting purposes, effective immediately. This requirement includes adherence in their 2024 audited financial statements, underscoring a shift toward increased normalization of the local currency within formal economic activities.

In summary, Zimbabwe has witnessed a remarkable decline in consumer inflation, signaling potential economic stability. The ongoing commitment of the Reserve Bank to maintain high interest rates aims to curb volatility, though challenges persist in the informal sector. Nonetheless, the government’s push for wider adoption of the Zimbabwean Dollar showcases efforts to strengthen the local currency’s role in the economy.

Original Source: www.tradingview.com