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Zim consumer prices drop for 3rd month running

16 May 2014, 12:28

Harare - Consumer prices in Zimbabwe dropped for the third month running in April, data showed Thursday, in another indication of the weakness of the southern African country's economy.

"The year-on-year inflation rate for the month of April as measured by the all items Consumer Price Index stood at -0.26%," the Zimbabwe National Statistical Agency said.

That was the better than the 0.65 drop registered in March and 0.49% slide in prices recorded in February.

Month-on-month prices rose by 0.58%.

While dropping prices may initially be a boon for consumers, if deflation sets in and consumers expect prices to fall they may hold off purchases, causing a destructive cycle of slumping output, job losses, and further price cuts.

Analysts have said the falling prices are another sign of the poor state of the country's economy where output has slumped and consumers are hard pressed following years of upheaval.

Zimbabwe has been saddled with economic woes for over a decade following President Robert Mugabe's violence-plagued land reforms which decimated farming, the backbone of the economy.

Deflation is big switch for the country where annual inflation once hit 231 million percent, prompting the government to bin the local Zimbabwe dollar which had been rendered worthless.

The formation of a power-sharing government in 2009 by Mugabe and long-time rival Morgan Tsvangirai brought some stability in the economy, with some businesses resuming operations, but the investment climate has remained clouded by restrictions against foreign-owned companies.

The new central bank chief, John Mangudya, said earlier this month that the past three years had been tough, with the economy now weaker and the financial system depressed.



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