The Zimbabwean dollar which has for months been at the summit of world inflation index has fallen to second position, below the Venezuelan currency, a positive move.
According to renowned world economist Steve Hanke’s Currencywatch, in this week’s inflation roundup the Zimdollar takes second place.
“In this week’s inflation roundup, #Zimbabwe takes 2nd place.
“On Mar 2, I accurately measured Zim’s inflation at 480%/yr, almost 2x ZimStat’s official inflation rate of 243.8%/yr. Phony measurements from Taguma Mahonde & ZimStat,” says Hanke.
Meanwhile, according to Trade Economics, Zimbabwe’s consumer price inflation eased to 92.3% percent year-on-year in February 2023, down from the prior month’s 229.8% and moving further away from August’s 18-month high of 285%.
The annual inflation has been on a downside trend since September 2022, and reached its lowest level since March last year.
Apparently, the cause of Zimbabwe’s hyperinflation is attributed to numerous economic shocks.
The national government increased the money supply in response to rising national debt, there were significant declines in economic output and exports, and political corruption was coupled with a fundamentally weak economy.
Economic scientists say to tame the tide Zimbabwe should deal Economic fundamentals like fiscal policy ie a higher rate of income tax could reduce spending, demand and inflationary pressures.
Monetarists stress policies such as:
Higher interest rates (tightening monetary policy), Reducing budget deficit (deflationary fiscal policy), Control of money being created by the government among other things.