Inflation Developments

Manufacturing Sector Performance

37. The manufacturing sector performance is estimated to have increased in 2021 following volume recoveries across most subsectors that include foodstuffs, chemical and petroleum products, drinks & beverages, tobacco and non-metallic mineral products, supported by the stable economic environment, the auction system that provided the much needed forex, declining inflation as well as localisation of value chains. As a result, locally produced goods now constitute above 80% of retail sales in the country.

Inflation Developments

38. The country has made significant progress in containing inflation since July 2020. As a result, annual inflation declined from a peak of 837.5% in July 2020 to 50.3% in August 2021. The decline in inflation resulted from the implementation of appropriate disinflationary monetary policies and from fiscal consolidation. The resurgence of inflationary pressures at the end of 2021, which saw annual inflation closing the year at 60.7%, is a result of the parallel exchange rates pass-through effects in inflation.