Updated 26 August 2006
Zimbabwe Inflation 2005/02 through 2006/08 - an Analysis
Retail Food Price inflation July 2006 onwards...
This webpage will be updated at approximately monthly intervals from now (26 August 2006) onwards.
Comment 2006/08/25 - CPI seems steady as before; Parallel Market Rate seems to be returning to previous
trend instead of heading off into infinity; Stock Exchange seems to have gone ballistic - no idea why - probably
Therefore hyperinflation seems fairly steady at levels stated 30 July 2006
This second graph above is a logarithmic version of the first graph.
It shows that price inflation as measured by the Zimbabwe Consumer Price Index between
2005/02 and 2006/06 is a remarkably steady multiplier of 11.00 times per year, i.e. an
inflation rate of 1000%...
This is a factor of 1.047 per week, 1.22 per month, 2.22 per 4-month period, and of course 11.0 per year.
Ignore the blue dotted 'best straight line' shown in the above graph - it doesnt mean anything - apologies that it was not
simple to remove this....
This 4th graph above is a logarithmic version of the 3rd graph.
It shows movement of the parallel market exchange rate between 2005/09 and 2006/07;
this is an average multiplier of 9.78 times per year, i.e. an inflation rate of 878%.
Note that the above graph zig-zags around its average value, and that during the present period (2006/07)
it is on an upwards zig of the zig-zag pattern - during that period, instantaneous inflation is much more
rapid than on the downward zag....
These 2 figures taken in conjunction show that there was during the period 2005/09 and 2006/06
a US Dollar inflation of prices in Zimbabwe of 12.5% per year; this could be attributed to rising oil
prices during that period.
Since I used to collect and analyse Zimbabwe grocery prices during the period 2004/08 through 2004/10, I
did a spot check in 2006/07 of the same items, and converted both by the parallel market rates at those
time-frames; the result to me was quite surprising, and contradicted my gut feeling that
Zimbabwe retail prices were rising appreciably in US Dollar terms - in fact they were very much the same
at 2004/09 and at 2006/07. Put together with the 12.5% USD inflation finding as above, and we must also
therefore conclude that retail prices in US$ actually fell about 12.5% between 2004/09 and 2005/09....
(and then rose again also by 12.5% between 2005/09 and 2006/07)....
The above figures and graphs show that inflation is very entrenched in the Zimbabwean economy, but appears to have been
constant at 1000% p.a. during the period 2005/02 through 2006/06. NOTE that this does NOT mean that
inflation will necessarily continue to behave itself from now on and stay at its present rate - it may take off
at any time; conversely, it may decline, but that is very unlikely without the IMF
actively supporting the Zimbabwean Economy,
since that has not happened yet despite the stated intentions of
GOZ that they are trying to fight this evil....
Zimbabwe Stock Exchange (ZSE)
Thanks to ZSE for the above graph from their website, which covers 2005/08 thru 2006/07...
Taking 20,000,000 as a fair value at 1 January 2006 and 80,000,000 as a fair value
at 30 July 2006, then average inflation is a factor of 10.77 per annum over a 12-month period. This compares
reasonably well with CPI inflation factor of 11.00 per annum and Z$ vs. US$ depreciation factor of 9.78 per annum.
This webpage will be updated at approximately monthly intervals from now (25 August 2006) onwards.
Mr Alex Weir,
- 30 July 2006
Link to previous stuff done on zimbabwe inflation 2004/09