Zimbabwean finance minister Mthuli Ncube. Picture: BLOOMBERG/CYNTHIA R MATONHODZE
Zimbabwean finance minister Mthuli Ncube. Picture: BLOOMBERG/CYNTHIA R MATONHODZE

Singapore — Zimbabwean inflation is beginning to stabilise, even with consumer prices increasing more than 500% on an annual basis, finance minister Mthuli Ncube said.

Year-on-year inflation remains high, “but that’s expected, that happens when you liberalise a currency”, Ncube said on Wednesday in an interview with Bloomberg TV at the World Economic Forum in Davos.

After a decade of using a basket of foreign currencies, including the rand and the dollar, last year Zimbabwe re-introduced its own tender. It has plummeted to 17.1950 per dollar since a 1:1 peg was removed in February.

The country’s statistics agency suspended publishing year-on-year inflation data after June, when monthly inflation peaked at 39.3%. It still releases the consumer price index (CPI), which shows annual costs rose 521% in December, the most since a hyperinflation episode in 2009.

While monthly price growth has cooled, it was still at 16.6% in December, whereas Ncube said in February it could be close to zero by the end of 2019.

Still, investors can believe his government’s pledge to rein in inflation because they have “walked the talk”, he said.

“We said that month-on-month inflation is going to be stabilising and going to be dropping, [and] that’s what has been been happening. We believe that we are on our way to dealing with inflation. It will take time, but we are headed there.”

With Rene Vollgraaff

Bloomberg