The impact of the RBZ auction rate on the cost of living

When the local currency is strong, imported goods become cheaper, enabling more standard purchases to be made, like groceries. As of 22 September 2022, the RBZ auction rate was standing at ZWL$ 613.3681 per US dollar, indicating a decline in strength from ZWL$604.2850, the previous week. As shown in the graph above, auction rates for the month of September 2022 have been steadily rising on a weekly basis. The RBZ auction rate has had an impact on the cost of living in Zimbabwe since its introduction in 2020. Precise Management and Research Consultancy is of the view that a relationship exists between the RBZ auction rate and the cost of living. Changes in the Reserve Bank of Zimbabwe (RBZ) auction rate has affected the pricing of basic commodities, housing costs and transportation costs. For the past few weeks, prices of basic commodities have been rising, amid concerns that this is influenced by the continual rise in auction rate. According to ZIMSTAT, the Food Poverty Line (FPL) for one person in the month of August 2022 was $20 461.00 while the Total Consumption Poverty Line (TCPL) for one person stood at $26 623.00 in the same month. Our latest National salary and benefits survey report highlights that the least paid employee in the banking sector, perhaps a student earns between ZWL$ 80 000 and ZWL$ 160 000. In the insurance sector, the least paid employee earns between ZWL$120 000 to ZWL$300 000 and for Parastatals the lowest paid employee earns between ZWL$ 100 000 to ZWL$170 000. Which leaves one with questions on relying on the ZIMSTAT data. Our assessment shows that every time the RBZ auction rate increases the cost of living is also increasing.

For the latest salary survey report and the cost-of-living survey report kindly inquire with us on +263 776 171 794 or email us on info@precisemrc.co.zw.