Zimbabwe’s headline inflation rate for December 2025 registered at 19.00% year-on-year, a marked decline from 32.70% recorded in October 2025 and a steep drop from the 57.50% peak in April 2024. This data, sourced from the Sigmanomics database, highlights a significant easing of inflationary pressures after a prolonged period of hyperinflation-like conditions.

Drivers this month

• Lower food and fuel prices contributed to a 5.50 percentage point reduction in headline inflation.
• Stabilization of the Zimbabwean dollar against the US dollar reduced imported inflation.
• Government price controls on essential goods helped contain cost-push inflation.

Policy pulse

The current inflation rate remains above the central bank’s informal target range of 5-10%, but the downward trend signals progress. The Reserve Bank of Zimbabwe’s tighter monetary stance, including higher policy rates and liquidity controls, appears to be bearing fruit.

Market lens

Immediate reaction: The ZWL/USD exchange rate appreciated by 1.20% within the first hour post-release, reflecting improved confidence. Short-term government bond yields fell by 15 basis points, signaling easing inflation risk premia.

Zimbabwe’s inflation trajectory must be understood alongside key macroeconomic indicators. The country’s GDP growth is estimated at 3.10% for 2025, a modest recovery from contraction in 2023. Unemployment remains high at 22%, exerting downward pressure on wage-driven inflation.

Monetary Policy & Financial Conditions

The Reserve Bank of Zimbabwe has maintained a restrictive monetary policy stance since mid-2024, with the policy rate elevated at 45%. Money supply growth slowed to 12% YoY in November 2025, down from over 40% in early 2024. Banking sector liquidity remains tight but stable.

Fiscal Policy & Government Budget

Fiscal consolidation efforts have reduced the budget deficit from 9.50% of GDP in 2024 to an estimated 6.20% in 2025. Revenue collection improved due to enhanced tax administration, while subsidies on fuel and food have been gradually phased out, reducing fiscal drag on inflation.

External Shocks & Geopolitical Risks

Zimbabwe continues to face external vulnerabilities, including commodity price volatility and regional trade disruptions. Political tensions in neighboring countries and sanctions risks add layers of uncertainty to the inflation outlook.

Historical comparisons show that the current inflation rate is the lowest since October 2023’s 17.80%, signaling a return to more manageable inflation levels after a year of volatility. The sharp decline from the 2024 peak underscores the effectiveness of policy measures and external factors easing cost pressures.

Market lens

Immediate reaction: The ZWL currency strengthened by 1.20%, while 2-year government bond yields declined by 15 basis points, reflecting improved inflation expectations and reduced risk premia.

Looking ahead, Zimbabwe’s inflation trajectory depends on multiple factors, including monetary policy consistency, fiscal discipline, and external environment stability.

Bullish scenario (30% probability)

• Continued monetary tightening and fiscal consolidation drive inflation below 10% by mid-2026.
• Currency stability improves, reducing imported inflation risks.
• Structural reforms boost productivity and ease supply constraints.

Base scenario (50% probability)

• Inflation stabilizes around 15-20% through 2026, reflecting moderate policy effectiveness.
• External shocks cause occasional price spikes but are contained.
• Gradual improvement in economic growth supports demand-side stability.

Bearish scenario (20% probability)

• Renewed currency depreciation triggers inflation resurgence above 30%.
• Fiscal slippage and political instability undermine policy credibility.
• Global commodity price shocks exacerbate cost-push inflation.

Risks to the outlook include potential geopolitical tensions, volatility in commodity markets, and domestic political developments. Close monitoring of monetary and fiscal policy signals will be critical.

Zimbabwe’s inflation rate easing to 19.00% YoY marks a significant milestone in the country’s macroeconomic stabilization journey. While inflation remains elevated, the downward trend reflects effective policy measures and improving economic fundamentals. The balance of risks suggests cautious optimism, but vigilance is warranted given external and domestic uncertainties.

Continued policy discipline, structural reforms, and external support will be essential to sustain disinflation and foster economic growth. Investors and policymakers should watch currency movements, fiscal developments, and regional geopolitical dynamics closely in the coming months.

Key Markets Likely to React to Inflation Rate YoY

Inflation data in Zimbabwe typically influences currency markets, government bond yields, and commodity-linked equities. The following tradable symbols have shown historical sensitivity to Zimbabwe’s inflation trends and macroeconomic shifts:

• ZWLUSD – Zimbabwean dollar exchange rate reacts directly to inflation and monetary policy shifts.
• ANG – Anglo American plc, a major mining company, sensitive to commodity price changes linked to inflation.
• BTCUSD – Bitcoin often serves as an inflation hedge in emerging markets.
• GLD – Gold ETF, a traditional safe haven during inflationary uncertainty.
• USDEUR – USD/EUR pair reflects global risk sentiment impacting emerging market currencies.

FAQs

What is the current inflation rate YoY for Zimbabwe?

The latest inflation rate for Zimbabwe is 19.00% year-on-year as of December 2025.

How does Zimbabwe’s inflation compare historically?

Inflation peaked at 57.50% in April 2024 and has since declined steadily, marking a significant easing.

What factors influence Zimbabwe’s inflation rate?

Key drivers include monetary policy, fiscal discipline, currency stability, commodity prices, and geopolitical risks.

Takeaway: Zimbabwe’s inflation moderation signals progress but requires sustained policy efforts and vigilance against external shocks to ensure lasting price stability.

This has been drafted with AI assistance and then thoroughly reviewed, refined, and approved by our human editorial team to ensure accuracy, and originality.