A drop in the monthly inflation rate may have been greeted with sighs of relief by the Zimbabwean government, but analysts and consumers have seen little evidence that the economy has turned a corner.
After suppressing inflation data since May, the central statistics office announced last week that while the annual rate had hit a new high of 7 634,8%, month-on-month inflation in July was 31,6%, a fall of 54,6 percentage points on the June rate.
Finance Minister Samuel Mumbengegwi said the figure vindicated the government’s imposition of price cuts in late June, which effectively forced businesses and retailers to halve their tariffs.
But with shelves bare of everyday commodities such as cooking oil and sugar, most Zimbabweans find themselves paying well above the official rate on the black market where the decline in the official inflation rate is irrelevant.
”The ordinary consumer is paying more than the actual price. This is the real inflation, not the inflation they show on graphs,” said Daniel Ndlela, an economist with Zimconsult. ”The said deceleration is only good for those who want to believe their own lies.”
Ndlela said there is evidence of a crisis everywhere, citing an example of people who were lined up at a hardware store to buy cement at the government price of Z$150 000 per 50kg.
”The queue resembled a desperate situation of people trying to enter Rufaro Stadium [in Harare] to watch a popular soccer match,” he said. The prospective buyers were not ”building homes or anything, but they will just resell the same bag at Z$1,5-million around the corner. ”That is real inflation, not what we hear.”
Nothing to buy
Lucky Mapfumo (23), a University of Zimbabwe medical student, said a slowdown of the inflation juggernaut means little if there is nothing to buy. ”I have plenty of money on me, but I can not buy anything because there is nothing in the shops,” he said. ”We heard the government reduced prices, but I don’t remember the last time I had bread and now we hear that inflation is slowing down.”
Conscious of the widespread shortages, the government announced on Wednesday the prices of some goods such as cooking oil and sugar could be increased but most shops in Harare remained bereft of such items.
While the price crackdown was initially welcomed as it enabled Zimbabweans to stock up on goods that had been out of their price range, the subsequent shortages as a result of manufacturers being unable to cover their costs has stoked resentment towards the government.
Witness Chinyama, a Harare-based independent economist, said the suppressed inflation and price cuts were never going to work. ”The way forward for government is to now try and stabilise the macroeconomic environment,” he said. ”What was announced is simply suppressed inflation, which is not helpful because they are suppressing the symptoms and not the underlying causes.”
Tapiwa Mashakada, secretary for economic affairs for the opposition Movement for Democratic Change, forecast the slowdown of inflation would be temporary. ”People have become professionals queueing for basic commodities and there is untold suffering as result of government actions,” Mashakada said.
Deputy Industry Minister Phineas Chihota said although inflation is decelerating, more still needs to be done. ”As government, we have a distressed funding scheme for companies which we avail funds to firms at very low interest,” he said. ”By availing funds cheaply, this will result in goods being available in the shops and this will benefit the ordinary men in the street.”
Zimbabwe was previously regarded as a regional bread basket, but the economy first ran into trouble in 2000 when President Robert Mugabe ordered the seizure of white-owned farms that had been a major source of revenue.
The situation has worsened in the intervening years to such an extent that more than three million Zimbabweans have fled the country and four out of five people are now unemployed.
Mugabe, in power since independence in 1980, has blamed the former British colony’s economic woes on targeted sanctions imposed by the West over allegations he rigged his re-election in 2002. — Sapa-AFP