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Blended inflation concept clarified

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Story by Davison Vandira, Business Reporter

THE Reserve Bank of Zimbabwe (RBZ) says the introduction of the blended inflation concept is meant to ensure figures reflect the dual currency system adopted by the country in 2020 to strengthen macro-economic stability.

In March 2020, Zimbabwe adopted a dual currency system moving away from the mono currency structure proclaimed in June 2019, but the responsible authorities continued to calculate inflation from a mono perspective.

Monetary authorities have however realised it is not practical as the United States dollar is dominating transactions ranging from deposits, expenditure and income, hence the RBZ has moved in to correct the anomaly.

The move is part of a cocktail of monetary measures announced by the Central Bank Thursday.

RBZ governor, Dr John Mangudya noted, ‘‘As monetary authorities, we realised that we have been using the incorrect monetary dynamics to come up with inflation figures, hence going forward, the inflation figures will be the blended one because we are officially using the dual currency since 2020, hence it is critical that our inflation also reflects the dual currency composition to give a true reflection of what is obtaining in our economy.”

The measures are aimed at deepening macroeconomic stability, with inflation figures expected to continue going down on account of a tight monetary policy stance.