Harare – THE International Monetary Fund (IMF) has warned of rising inflation in Zimbabwe, saying it is likely to reach seven percent by year-end, four months after the southern African country slipped out of deflation.
Zimbabwe first entered deflation in February 2014 when the inflation rate went below zero.
The IMF, in its Staff Report for the 2017 Article IV Consultation, warned the country’s inflation will top 7% by December, with liquidity constraints also set to frustrate any growth prospects.
“Insufficient liquidity will continue to hamper imports and affordable financing, encumbering growth prospects. Inflation and inflation expectations will rise in line with money creation and increasing import prices due to the controls’’.
“Annual average inflation is set to be 2–3 percent, which implies an increase to about 7 percent by year-end. The IMF proposes stricter fiscal discipline by Government as well as structural reform to spur further growth in its medium-term outlook,” the IMF said.
Any talk of a rise in inflation brings sad memories to millions of Zimbabweans who lost their life savings to hyper-inflation in 2008.
In 2008 the monthly inflation rate hit 3.5 million percent with an egg costing 50 billion Zimbabwean dollars.
A loaf of bread then cost as much as 12 new cars could have cost 10 years before.