Zimbabwe's Annual Inflation Rate Rises to 57.5% in April 2024, Expected to Decline with New Gold-Backed Currency

Zimbabwe's annual inflation rate increased to 57.5% in April 2024, up from 55.34% in March 2024, according to the latest data released by the country's statistics agency. The month-on-month inflation rate was 2.9% in April, down from 4.9% the previous month.

The Food Poverty Line for one person in April 2024 was ZiG424.95, and the Total Consumption Poverty Line was ZiG650.26. These figures reflect the continued economic challenges faced by many Zimbabweans.

However, there is hope that the inflation rate will decline significantly in the coming months due to the introduction of the gold-backed Zimbabwe Gold (ZiG) currency on April 5, 2024. The new currency, which is backed by 2.5 tons of gold and $100 million in foreign currency reserves held by the central bank, is currently trading at a rate of 14:00 against the US dollar and enjoying a more stable exchange rate with less volatility compared to previous currencies.

Why this matters: Zimbabwe's high inflation rate has been a major economic challenge for the country, eroding the purchasing power of its citizens and hindering economic growth. The introduction of the gold-backed ZiG currency is seen as a critical step towards stabilizing the economy and restoring confidence in the monetary system.

Analysts believe the new currency has already begun to shift the upward trends in monthly inflation, which has started to decline. The central bank maintains the key rate at 20% after the introduction of the ZiG and reset interest rates from 130% to 20% on the same day. The monetary policy committee expects the currency reforms to help provide "stability, certainty and predictability in the exchange rate and inflation."

As Zimbabwe continues to grapple with economic challenges, the success of the new gold-backed currency will be closely watched by citizens, businesses, and international observers alike. The government and central bank are hopeful that the ZiG will bring much-needed stability and set the stage for sustainable economic growth in the years to come.

Key Takeaways

• Zimbabwe's annual inflation rate rose to 57.5% in April 2024.
• The Food Poverty Line was ZiG424.95, and the Total Consumption Poverty Line was ZiG650.26.
• Zimbabwe introduced a gold-backed currency, the Zimbabwe Gold (ZiG), on April 5, 2024.
• The ZiG is trading at 14:00 against the US dollar and has a more stable exchange rate.
• The central bank expects the currency reforms to provide stability, certainty, and predictability.