Zimbabwe’s annual inflation rate, on an almost vertical curve, hit 620% in November, according to official statistics issued on Wednesday.
Interest rates soared at about the same rate, marking the critical worsening of the economy.
Figures from the state Central Statistical Office said year-on-year inflation reached 619,5% to the end of November, while measured against the previous month, the rate rose 33,6%, against 25% in October, itself a record.
Food prices in November shot up 35%, drinks and tobacco by 49% and clothing and footwear by 21,9%. The worst, however, was medical expenses which went up 224% in a single month.
Meanwhile, interest rates hit to 635% on Monday this week, the state-controlled daily Herald newspaper reported.
The interest rate surge was a result of a shortage of liquidity driven largely by rapidly rising costs. Last week, local reports said, at least four banks failed to raise normal liquidity requirements and the local market fell Z$179-billion (about
US$28-million) of demand.
The pressure abated after the Central Bank pumped in Z$150-billion (US$23-million) during the week, but after two days, it was back up again.
”Everybody is scrambling,” said economist Tony Hawkins. ”Earlier this year it was a shortage of banknotes, now it’s a shortage of liquidity. There’s only one way the rate can go, and that’s up, unless they take drastic action.”
Finance company executives warn of a looming banking industry crash.
New Central Bank governor Gideon Gono is due to make a major monetary policy statement on Thursday.
President Robert Mugabe still exercises full control over the country’s finances, insisting on low interest rates and controlled commodity prices, and has denounced calls for the devaluation of the currency — now pegged at US$1/Z$824, against a parallel rate of US$1/Z$6 500 — as ”treason.”
Once second in Africa only to South Africa’s economy, Zimbabwe now has the highest inflation rate in the world and its fastest falling gross domestic product. – Sapa-AFP