Inflation hits a record high in Zimbabwe
Zimbabwe’s inflation rate hit an all-time high of 782% in February, according to government statistics released on Friday.
“The year-on-year rate of inflation in February 2006 was 782%, gaining 168,8 percentage points on the January rate of 613,2%,” Moffat Nyoni, acting director of the Central Statistical Office, told a news conference.
“This means that on average, a bundle of goods and services by households for final use in Zimbabwe was about eight times as expensive in February 2006 as it had been 12 months before.
“A bundle of goods and services that cost Z$100Â 000 in February 2005 would on average cost Z$882Â 000 in February 2006.”
Goods and services which recorded the highest price increases were hair-dressing shops, which went up 3Â 312,6%, postal services, which soared by 3Â 064,1% and rentals, which went up by 2Â 083,7%, Nyoni said.
Zimbabwe is in the throes of economic crisis characterised by runaway inflation, soaring poverty levels, an unemployment rate hovering at over 70% and chronic shortages of fuel and basic goods like cornmeal.
Over 4-million Zimbabweans in a population of 11,6-million face food shortages, according to United Nations agencies.
In January, central bank governor Gideon Gono warned that inflation could peak at over 800% in March before receding to below 500% in June and dwindling to a double-digit figure in 2007.
Initially Gono had projected that inflation levels would reach between 280% and 300% by December 2005. Inflation in Zimbabwe reached its previous peak in January 2004, hitting 624%.
Independent economist Eric Bloch said the steep rise in inflation would “cause a lot more hardship” to Zimbabweans already struggling with joblessness and shortages of food and other basic goods like fuel.
“There are going to be major demands for wage increases, thus causing further inflation,” Bloch told Agence France-Presse.
“This means higher inflation in April and even more hardship for the majority of Zimbabweans,” he said.
Economist David Mupamhadzi said the galloping inflation was a reflection of a failed economy and blamed the jump on the growth in the money supply.
“We are now feeling those effects of the printing of money,” Mupamhadzi said, adding that the rise would fuel demands for higher wages from workers battling to catch up with rising prices of goods and services.
He projected even higher inflation in the coming months, saying prospects of a decline before mid-year were nil.
Central bank governor Gideon Gono has blamed inflation partly on the printing of money that he said was necessary to service the debt to the International Monetary Fund (IMF).
He revealed last month that the central bank resorted to printing Z$21-trillion to buy foreign currency to clear the country’s arrears with the IMF.
Zimbabwe last month made a payment of $9-million to the IMF to avert expulsion from the global lender over long-overdue arrears.
The body had threatened to expel Zimbabwe from its ranks for failing to pay back loans since 2001 and had given the southern African country until February to settle its accounts.
Confederation of Zimbabwe Industries economist Bernard Mufute urged monetary restraint and a change in economic policy to rein in inflation, often referred to as the number one enemy by the
central bank chief.
“The authorities have to appreciate that we are in a crisis and do something right now,” Mufute said.
“They know what has to be addressed, such things such as fiscal policy, the exchange rate has to be allowed to freely move on its own,” he said.
William Nhara, a government analyst, predicted higher inflation in the coming months and called for collaboration between the state, business and labour to work out measures to control inflation.
Nhara recommended a price and wage freeze for six months to stop inflation.
The IMF executive board meeting in Washington this week decided to deny financial aid to Zimbabwe and said the economic crisis in the country “calls for urgent implementation of a comprehensive policy-package comprising several mutually reinforcing actions in the area of macroeconomic stabilisation and structural reforms”.—Sapa-AFP