Zimbabwe’s central bank celebrates 2.9% inflation, but the market tells a different story

Zimbabwe’s annual ZiG inflation has fallen to 2.9%, its lowest single-digit reading since 1980, but the improvement in price stability is raising a bigger question: are households actually better off, and do Zimbabweans have enough confidence in the local currency to save in it?

The Reserve Bank of Zimbabwe (RBZ) Governor John Mushayavanhu said the latest figure demonstrated that his policies were delivering price, currency and exchange-rate stability. ZiG inflation has remained below 5% throughout the first eight months of the year, averaging 4%.

However, economist and fintech commentator Jabulani Simplisio Chibaya cautioned against viewing the inflation figure as a complete measure of economic wellbeing.

“The real test of monetary stability is therefore not simply whether inflation is low, but whether people voluntarily choose to hold, save, price and transact in ZiG,” Chibaya said.

He said stable prices should not automatically be interpreted as improved living standards.

“Stable prices are not the same as affordable prices, and macroeconomic stability is not the same as rising living standards,” he said.

The currency-confidence question is particularly significant in Zimbabwe’s multi-currency economy.

As of August 21, the official exchange rate was around ZiG26.63 to the US dollar, while reported parallel-market rates were around ZiG33, representing a premium of about 24%.

The gap does not necessarily erase the progress made on inflation, but it raises questions about confidence, price discovery and whether the ZiG is being treated as a store of value.

Economics graduate Zondai Last Tsonzeni said Zimbabwe’s next challenge was to convert macroeconomic stability into broader economic growth.

“Stability is not the final destination,” Tsonzeni said. “The bigger question is: Can stability be converted into sustainable economic growth?”

He said genuine monetary confidence would be demonstrated when households and businesses were prepared to hold, save and invest in the domestic currency.

“A currency can achieve relative exchange-rate stability, but the deeper test is whether households and businesses are willing to hold it, save in it, invest in it and use it as a store of value, rather than primarily for transactions,” he stated.

The RBZ, however, said the 2.9% ZiG inflation rate compares favourably with US-dollar inflation of 3.1%, meaning prices have risen at broadly similar rates in both currencies.

The central bank argued that this should make businesses increasingly indifferent between pricing and accepting payments in ZiG or US dollars.

“The annual ZiG inflation in August 2026 of 2.9%, compares favorably with domestic US dollar inflation of 3.1%. This entails that prices of domestic goods and services, since August 2025 have increased at relatively the same pace in both ZiG and US dollar.

“Importantly, the implication is that businesses should be indifferent in terms of pricing and accepting payment in either foreign currency or ZiG,” Mushayavanhu stated.

“In this regard, the prevailing low and stable inflation environment should support greater predictability and certainty in business planning and investment critical for the wider use of ZiG in the multi-currency environment.”