Nelson Gahadza
The Confederation of Zimbabwe Industries says the policy target for an annual ZiG inflation of about 30 percent is highly achievable, amid a downward trend anchored by a negative monthly rate lately and the stable local currency.
In its October 2025 inflation and currency developments update, the CZI said it was highly likely that ZiG’s month-on-month inflation will remain below 0,5 percent for the remaining two months of the year.
“As a result, annual inflation is likely to fall into a range of 15 percent and 20 percent by December 2025, which would be a huge achievement on the monetary policy front,” CZI said.
The central bank’s target is to lower the annual ZiG inflation rate to less than 30 percent by the end of 2025.
The Reserve Bank of Zimbabwe and the Ministry of Finance, Economic Development and Investment Promotion have maintained tight monetary and fiscal policy stances to ensure price and exchange rate stability for the ZiG currency, which was introduced in April 2024.
The authorities are working towards sustaining the current low month-on-month inflation rates and ensuring the stability of the ZiG exchange rate, which is backed by gold and foreign currency reserves.
The durability of the prevailing stability will be key to the Government’s plans to reintroduce domestic mono-currency from 2030.
According to CZI, the ZiG year-on-year inflation rate was 32,7 percent in October 2025, shedding 50 percentage points from 82,7 percent in September 2025.
CZI said the steep fall in inflation largely reflected the end of the legacy from the September 2024 devaluation, which had created a very large consumer price index (CPI).
“With month-on-month inflation being well managed, it is expected that annual inflation will continue to go down. This can only be achieved if ZiG’s month-on-month inflation continues to be in the negative territory.
“However, an inflation rate of 30 percent is still too high, calling for more disinflation strategies into 2026,” CZI highlighted.
According to CZI, the month-on-month inflation has been on a declining path for three consecutive months, and the rate of decline to -0,4 percent in the month of October 2025 from -0,2 percent in September 2025 is the lowest inflation rate that has been recorded in 2025.
“A deflation means that goods and services are becoming cheaper in ZiG terms. This can benefit consumers in the short term, as their purchasing power would have risen slightly.
“It also means that consumers who kept ZiG balances in their bank accounts are now able to purchase slightly more goods than they could have bought in August 2025.
“If this momentum is maintained, it could significantly enhance confidence in the ZiG,” said CZI.
CZI noted that the US dollar month-on-month inflation for October 2025 increased to 0,3 percent from a rate of 0 percent in the month of September 2025, which means prices in US dollar terms remained stable as the observed increase is minimal.
It added that when the de-dollarisation programme gets rolled out, the inflation differential between ZiG and the US dollar will matter in the decision of which currency to use in transactions.
“The US dollar price stability would make the USD attractive as both a transaction and savings currency. ZiG stability has to be sustainable for a very long time before it can also be considered a close substitute for the USD,” CZI noted.
It also highlighted that the USD year-on-year inflation continued the declining trend which started in July 2025, and in October 2025, USD inflation declined to 13 percent from 13,4 percent registered in the month of September 2025.
“However, a 13 percent USD inflation is still very high, as it means that savings in USD lost about 13 percent of purchasing power between October 2024 and October 2025.
“With the USD being the main savings currency, it is critical for its inflation to remain very low if savings are to be protected,” CZI noted.
On the currency front, the CZI, ZiG, remained stable on both the official and parallel markets in the month of October 2025, with the parallel market premium remaining close to 20 percent.
“This means that the official exchange rate management policy has not created distortions, as these are mainly reflected in the parallel market premium.
“As stability in the official exchange rate becomes sustainable, the value at which the premium maintains its stability could become the policy target, as it would reflect the level of returns at which parallel market currency traders might not be willing to go below,” CZI said.
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