Fuel price effects trigger fresh inflationary pressures
STAFF WRITER
The Zimbabwe Gold (ZWG) annual inflation rate edged up to 4.7% in June 2026 from 4.4%% recorded in May as the global supply chains continue to face pressure from geopolitical tensions involving the United States, Israel and Iran, which have disrupted the routes, resulting in increased raw material costs and heightened uncertainty in international trade.
Multiple economists said the Middle East crisis effects will affect the country in the near future as some trade routes are yet to be fully opened and some of the procured raw materials are yet to reach their destinations.
They argued that despite the slight decrease in fuel prices to US$1.98 per litre from US$2.08, some traders are still charging exorbitant prices due to the uncertainties in the distribution channels.
Economist Vince Musewe said imported inflation has continued to affect local goods and services prices.
“We must worry more about United States dollar inflation since we have a de facto dollarised economy. ZiG inflation creeps up in reaction to any increased import costs,” Musewe said.
Eddie Cross said there has been a decline in the value of the United States dollar is one of the primary drivers of inflation in Zimbabwe at this point in time as the hard currency seemed to be devaluing at 4% per annum at the moment and that will have an impact on Zimbabwe as the US$ is the major currency of trade in the country.
“The price increase of fuel has had an impact on everybody and everything. This had a bearing on inflation for the month of June,” Cross said.
According to a veteran economist Tony Hawkins, the slight increase in the June rate was anticipated.
“Only surprise is that it remains below 5%. Main cause is fuel price and associated knock on effects. It is now impossible to predict future trends which depend on global developments especially in the Middle East and also on the impact of El Nino world food prices,” Hawkins said.
The inflation was starting to go down but unexpectedly accelerated in June.
Contrary to the Reserve Bank of Zimbabwe (RBZ)’s prediction which anticipated the price increase to continue until June then start to go down, in reality the prices were coming down during the past two months then elevated in June.
Economist Malone Gwadu defended RBZ’s prediction saying despite the increase, inflation remained under 5% which is normal.
“This shift of inflation figure from 4.4 to 4.7 in June is a slight or marginal increase and is not a threat to the existing stability that has been achieved. It’s a healthy situation because as long as we are within the expected range of movement. It’s nothing really to worry about, it’s just a general activity in the economy that may push here and there but within the acceptable level of movement. It’s not necessarily a rock on the boat in terms of the expected movement in the cooling of inflation which we have largely achieved so far,” Gwadu said.
According to Zimbabwe National Statistics Agency (ZimStat), ZWG month-on-month inflation rate was 0.6% in June 2026, gaining 0.1 percentage points on the May 2026 rate of 0.5%.
“For the month of June 2026, increases in the index were mainly observed on the housing, water, electricity, gas and other fuels division,” ZimStat said.
The US$ month-on-month inflation rate for June 2026 was 0.1 percent shedding 0.2 percentage points on the May 2026 rate of 0.3 percent while the year-on-year inflation rate (annual percentage change) for the month of June 2026 as measured by the all-items US$ Consumer Price Index (CPI), was 3.1% , gaining 0.3 percentage points on the May 2025 rate of 2.8% .
The weighted month-on-month inflation rate was 0.2% in June 2026, shedding 0.2 percentage points on the May 2026 rate of 0.4% while the weighted year-on-year inflation rate (annual percentage change) for the month of June 2026 as measured by the all-items weighted CPI was 3.5% , gaining 0.3 percentage point on the May 2026 rate of 3.2%.
The Food Poverty Line (FPL) for one person in June 2026 was ZWG921.72.
“Food Poverty Line represents the amount of money that an individual requires to afford a daily minimum energy intake of 2,100 calories,” the agency said.
ZimStat uses the consumer basket for an individual deemed to be extremely poor to calculate the poverty line.
The Total Consumption Poverty Line (TCPL) for one person was ZWG1,345.21 in June 2026.
The TCPL is derived by adding the non-food consumption expenditures of an individual deemed to be extremely poor and the FPL.