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Rapid devaluation of the local currency in mid-March drives significant price increases

  • Key Message Update
  • Zimbabwe
  • March 2020
Rapid devaluation of the local currency in mid-March drives significant price increases

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  • Key Messages
  • Key Messages
    • The ongoing delivery of humanitarian food assistance is preventing more severe acute food insecurity, and Stressed! (IPC Phase 2!) outcomes are present across much of the country.  Crisis (IPC Phase 3) outcomes persist in some areas, though, and some worst-affected households are likely in Emergency (IPC Phase 4).  Outcomes are expected to marginally improve to Stressed (IPC Phase 2) in surplus-producing areas following the harvest starting in April. However, in deficit-producing areas, Crisis (IPC Phase 3) outcomes are expected to persist, driven by limited harvests and continued very poor macroeconomic conditions.

    • According to the Ministry of Health and Child Care, the first confirmed positive case of COVID-19 in Zimbabwe was reported on March 20, and 8 cases were confirmed as of March 30. The government announced a 21-day nationwide lockdown starting March 30. This lockdown restricts the normal movement of people, goods, and services, including a ban on some public transportation and closure of borders to non-essential travel. However, the restrictions exempt critical producers and services, including humanitarian assistance distributions. These measures aimed at limiting the spread of the virus are likely to have direct and indirect impacts on livelihoods and markets for both rural and urban households, specifically in southern areas where poor households rely heavily on remittances and informal imports from South Africa.

    • In March, ZIMSTAT reported annual inflation for February at slightly over 540 percent; however, some independent sources report annual inflation above 1,000 percent. The local currency devalued significantly in March as the official interbank rate fell by almost 30 percent and the parallel market rates nearly doubled compared to February. This drove significant increases in the prices of basic goods and services. In late March, the government announced the USD is now permissible for local transactions. The government also suspended the managed floating exchange rate and pegged the official exchange rate at USD 1:ZWL 25. The immediate and medium-term market and food security impacts are still being assessed, as the markets adjust to this new structure.

    • Demand for staple cereals remains high, although access is limited for many poor households given high prices and low income. Amidst critical maize grain shortages, prices across markets remain over 10 times the recent five-year average. Maize meal shortages continue to worsen with some people spending long hours waiting for deliveries at supermarkets, as the parallel market prices charged by other retailers and open markets are prohibitive for poor households. Bread prices increased by over 50 percent in March, as are prices for other basic commodities like cooking oil, sugar, flour, and soap. Additionally, panic buying and hoarding of basic commodities associated with the COVID-19 pandemic, mainly in urban areas, may result in increased shortages and further price increases.

    • Prolonged dryness across the country from mid-February through March negatively affected crop conditions after some improvement following early February rainfall. Further moisture stress resulted in permanent wilting of some crops in March. The green harvest recently started, although at significantly below average levels, and is having limited impact on household food access. Some desperate households are reportedly harvesting immature crops to increase consumption. Also, as water and pasture conditions remain critically low across typical arid areas, and high incidences of livestock disease have been reported, incomes from livestock are below normal.

    This Key Message Update provides a high-level analysis of current acute food insecurity conditions and any changes to FEWS NET's latest projection of acute food insecurity outcomes in the specified geography. Learn more here.

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