Business Reporter

Economists have hailed Zimbabwe’s return to single-digit ZiG inflation as an epochal milestone towards durable price and economic stability, but the harder part for authorities is sustaining the low inflation beyond 2026.

Official data for January 2026 shows that year-on-year ZiG inflation fell sharply to 4,1 percent from 15 percent in December 2025, marking the first time the annual domestic currency inflation rate dropped into single digits since 1997.

Month-on-month ZiG inflation stood at 0 percent, reinforcing a rare but long-awaited period of price stability in the domestic currency.

The development demonstrates the phenomenal success of the monetary and fiscal policies since the introduction of Zimbabwe’s foreign currency reserves and gold-backed structured currency, the ZiG.

This is especially remarkable considering that the local currency inflation rate peaked at 95,8 percent in July last year, gradually falling to beat the year-end target of between 25 and 30 percent.

Similarly, the ZiG exchange rate has remained little changed, trading at an average 26,7 through 2025, which has been key to domestic currency price stability, given local prices track changes in the US dollar-local currency exchange rate.

The Treasury said single-digit inflation is important to provide a predictable environment that fosters growth, builds investor and business confidence and attracts long-term domestic and foreign capital.

This is also critical for predictable long-term planning, elimination of arbitrage and speculation, promoting national savings and reducing operational costs for businesses.

The Treasury said the prevailing stability reflected deliberate policy alignment rather than chance. Finance, Economic Development and Investment Promotion Minister Professor Mthuli Ncube described the inflation outcome as “a historic milestone for Zimbabwe after nearly three decades”.

“This is a result of concerted and consistent efforts by the Ministry of Finance and the Reserve Bank of Zimbabwe through the implementation of complementary fiscal and monetary policies,” said Minister Ncube.

“Prudent fiscal policy over the past few years, and complementary monetary policy since the introduction of ZiG in April 2024, has resulted in macroeconomic stability.”

The minister said price stability meant low inflation, confidence in the local currency, business can implement long-term plans with certainty and that Zimbabwe was now aligned with the SADC Macroeconomic Convergence Benchmarks. These include the budget deficit, current deficit and inflation targets.

Economists, however, caution that the durability of this achievement will depend less on disciplined policy consistency, strong production growth and external conditions.

Harare economist Mr Malone Gwadu argues that sustaining single-digit inflation will require inflation-proofing measures that go beyond short-term controls. “Maintenance of single-digit inflation can only be achieved by consistent and coherent inflation-proofing policies,” said Mr Gwadu.

“The key is holding the fort on controlling money supply and ensuring it does not threaten existing single-digit levels.”

Mr Gwadu added that supply-side interventions are just as critical as monetary restraint. “Ramping up production, especially in exporting sectors such as mining, given rising international commodity prices like gold, helps control inflation,” he said. “It ensures currency stability and enhances defensive capabilities through increased foreign currency earnings and accumulation of reserves.”

From an investment perspective, Mr Tafara Mtutu said Zimbabwe has a reasonable chance of maintaining price stability through 2026, largely because the drivers of past inflation spikes are currently absent.

“The things that pushed inflation between 2018 and 2022 were scarcity of foreign currency, poor currency management by the central bank and droughts,” Mr Mtutu said. “All these drove depreciation in the local currency and fed inflation.”

He noted that conditions have shifted materially. “We are seeing that all three are not in the picture in 2026. There is a better chance that we can actually manage to maintain single-digit inflation in 2026.”

Beyond that horizon, however, Mr Mtutu struck a more cautious tone.

“Going beyond 2026 is a stretch,” he said. “We would need clarity on the stance of the central bank on monetary policy, whether interest rates are lowered or more ZiG liquidity is released.”

He also pointed to climate risks and commodity cycles.

“Another drought could push grain and food prices up, while sustained high gold prices and production are crucial to keeping foreign currency inflows strong,” he said.

“These are factors we cannot easily forecast.”

He challenged Zimbabweans to embrace the local currency.

“People should have confidence and accept the ZiG as it preserves value and is an acceptable medium of exchange,” said the Minister. “Businesses and investors can now implement their long-term plans with certainty.”

Minister Ncube noted that Zimbabwe is now aligned with SADC macroeconomic convergence benchmarks, including the inflation target range of 3 to 7 percent.

“For citizens, stable prices preserve buying power and protect savings,” he said. “For business, it enables long-term planning, reduces operational costs and enhances profitability.”

Looking ahead, he said the Government is committed to entrenching stability.

“We will continue implementing well-coordinated monetary and fiscal policies, which is critical for Vision 2030,” said Minister Ncube. “Business should exercise restraint in price setting, while workers should align salary adjustment requests to inflation developments.”

At the central bank, Reserve Bank of Zimbabwe Governor Dr John Mushayavanhu has linked sustained single-digit inflation to the long-term goal of a monocurrency system anchored on strong fundamentals.

“The transition to a single currency will only proceed once the fundamentals are firmly in place, and those fundamentals are non-negotiable,” he said.

Dr Mushayavanhu outlined conditions including sustained single-digit inflation, foreign currency reserves covering three to six months of imports, a unified and efficient foreign exchange system, and stable exchange rates around the ZiG.

“For our economy to be competitive, we need to have our own currency,” he has said.

Since its introduction in April 2024, the ZiG has helped tame inflation and stabilise the exchange rate, with annual inflation dropping from 95,8 percent in July 2025 to 15 percent by December. The currency has firmed by 1,5 percent since the start of 2026.

Economists broadly agree that the inflation breakthrough is real, but fragile. Whether Zimbabwe can maintain single-digit inflation beyond 2026 will depend on discipline in money supply, resilience to climate shocks, export performance and unwavering policy coordination.