Reserve Bank of Zimbabwe Governor John Mushayavanhu displays Zimbabwe Gold (ZiG) banknotes. Photo Credit: New Zimbabwe

NNA News - Zimbabwe's annual inflation measured in Zimbabwe Gold (ZiG) fell to 2.9 percent in August from 3.2 percent in July, extending the country's run of single-digit inflation as authorities point to greater price and exchange rate stability.

The latest figures from the Zimbabwe National Statistics Agency (ZIMSTAT) show that monthly ZiG inflation remained at 0.1 percent in August, unchanged from July. In US dollar terms, monthly inflation fell to 0.0 percent from 0.3 percent in July, while annual US dollar inflation remained at 3.1 percent.

The Reserve Bank of Zimbabwe (RBZ) independently recorded annual ZiG inflation at 2.89 percent and monthly ZiG inflation at 0.10 percent for August. Its figures put annual US dollar inflation at 3.13 percent and monthly US dollar inflation at 0.01 percent.

ZIMSTAT attributed the continued low inflation rates in both currencies to exchange rate stability during the month. The August reading marks another step in Zimbabwe's efforts to stabilise its domestic currency after the ZiG experienced significant inflationary pressure following its introduction in 2024.

Zimbabwean dollar banknotes are seen in circulation. The country's inflation rate has continued to moderate amid efforts to stabilise the local currency. Jekesai Njikizana/AFP

The latest figure is also below the RBZ's current projection for the year. Presenting the central bank's 2026 Mid-Term Monetary Policy Review, RBZ Governor John Mushayavanhu said annual ZiG inflation was projected to remain low and stable, averaging about 5 percent by the end of the year and remaining within the Southern African Development Community's macroeconomic convergence range of 3 to 7 percent. “Annual ZiG inflation is projected to remain low and stable, averaging about 5 percent and within the SADC macroeconomic convergence target of 3-7 percent by the end of the year,” Mushayavanhu said.

He added that monthly inflation was expected to remain below 1 percent, provided the economy was not affected by significant domestic or external shocks. Mushayavanhu said the improvement in price stability had also been accompanied by stronger foreign currency inflows and improved economic activity. “The anchoring of inflation expectations has also reinforced confidence in the local currency and strengthened monetary policy effectiveness, thereby laying the foundation for sustainable investment and economic growth,” he said.

The governor said Zimbabwe's economy remained on course for its 5 percent growth target for 2026, supported by agriculture, mining, manufacturing and services, alongside improved foreign currency availability and exchange rate stability. Foreign currency receipts increased to US$10.72 billion in the first half of 2026, according to the RBZ review, while usable foreign currency reserves reached US$1.7 billion by the end of July, equivalent to about 1.7 months of import cover.

The narrowing gap between inflation measured in ZiG and US dollars is significant for Zimbabwe, where both currencies continue to circulate. The August figures show annual inflation of 2.89 percent in ZiG compared with 3.13 percent in US dollars, a difference of less than a quarter of a percentage point. The convergence follows a substantial decline in ZiG inflation over the past year, while US dollar inflation has remained comparatively low.

For businesses and consumers operating in both currencies, the convergence provides a more stable environment for pricing and financial planning, although inflation figures alone do not determine the relative value of the two currencies in the foreign exchange market. The RBZ has also maintained a focus on exchange rate stability as part of its broader monetary policy framework. Mushayavanhu said the central bank would remain cautious about the risks to the gains made in inflation and exchange rate stability. “To preserve these gains, the RBZ will maintain its current prudent monetary policy stance and the Bank will stay the course into the second half of the year,” he said.

Reserve Bank of Zimbabwe Governor John Mushayavanhu briefing the media. Photo Credit: New Zimbabwe

The improvement in inflation comes as Zimbabwe continues to consider the eventual transition from its multicurrency system to exclusive use of the ZiG. The government and central bank have previously set out some conditions that must be met before such a transition can take place, including sustained price stability. Mushayavanhu has stressed that the transition will not be based on a fixed deadline. “The transition to mono-currency will be conditions-based and not date-dependent,” he said.

This means the continued decline in inflation is an important part of the process, but a single monthly reading does not by itself determine when Zimbabwe will move to a mono-currency system. The central bank's latest position is that inflation must remain low and stable while other monetary and economic conditions are strengthened.

Zimbabwe's latest inflation figures mark a significant change from the severe price instability experienced in previous years. The challenge for policymakers is now to maintain that stability while supporting economic growth and protecting household purchasing power. The RBZ has said the improved macroeconomic environment is being supported by stronger foreign currency inflows, rising reserves and a more stable foreign exchange market. At the same time, the central bank has warned that external shocks, international commodity prices and domestic economic conditions could still affect inflation and foreign currency earnings.

Mushayavanhu said monetary policy would therefore remain responsive to emerging risks. “Price, currency and exchange rate stability are firmly and durably anchored,” he said.

For Zimbabwe, the significance of the August inflation reading will ultimately depend on whether the current trend can be sustained. The RBZ's stated objective is not simply to achieve a low inflation rate for a few months, but to establish sufficiently durable monetary stability to support investment, economic activity and eventual decisions on the country's currency framework.