New price shocks for Zimbabwe

A shocking new range of price increases were announced on Tuesday as Zimbabwe’s world-record hyperinflation spun further out of control, with charges for cellphone calls soaring by nearly 1 700%.

The official National Incomes and Prices Commission said international calls were up to Z$1,2-million from Z$67 400 per minute, while local calls shot up by 600% from Z$43 000 to Z$300 000.

However, the new prices were accompanied by a sharp new fall in the value of the Zimbabwe dollar on the illegal black-market exchange rate, which is used exclusively in private trade and business.

The basic rate of the Zimbabwe dollar fell from Z$5,5-million to the United States dollar at the end of last week to Z$7,5-million being quoted on Tuesday. It means a local cellphone call will cost the equivalent of 4 US cents.

This time last year, one US dollar was worth Z$3 000.

The prices commission also announced that the price of a 50kg bag of cement had gone up to Z$88-million—from about Z$4-million on the black market in December, an increase of 1 200%.

Cement has been in critically short supply for months, because factories stopped producing after the commission forced them to sell it at less than it cost them to manufacture.

Commission chairperson Godwills Masimirembwa said cement had become available after the commission granted an increase in the price of coal used in the production of cement. For months coal has been selling at the equivalent of a couple of US dollars a ton.

Companies complain that the commission takes weeks to consider applications for price increases and by the time it grants an increase, inflation has taken the cost of production way beyond what they had asked for.

The Ministry of Finance in September last year barred its central statistical office’s monthly issue of inflation figures, but the central bank announced last month that inflation at November stood at $26 000%.
The International Monetary Fund estimates that by the end of last year it hit 150 000%.

Economists blame President Robert Mugabe’s reckless economic policies, chiefly his instructions to the central bank to print local currency to meet any shortfall in state spending, and on price controls. A new Z$10-million note introduced last month is now worth just enough to buy three copies of the state daily propaganda Herald newspaper.

Basic food commodities have also been hit by inflation, with bread rising from Z$1,5-million a loaf last month to Z$3,7-million, the price hikes compounded by a collapse in agricultural production triggered in 2000 with Mugabe’s seizure of white-owned farms, which drove about 4 000 farmers and their families and about a million farm workers and their families from the land.

Last year the regime launched a massive drive to resuscitate crop and livestock output, promising ample supplies of seed, fertiliser and pesticides, and also spending US$25-million on importing 2 125 tractors, 85 combine harvesters and other equipment for distribution among newly resettled farmers.

It said the 2007/08 summer cropping period would be “the mother of all agricultural seasons”.

However, the government has since admitted that seed and fertiliser supplies were far short of demand. On Tuesday, Minister of Agricultural Mechanisation Joseph Made said the government was “concerned” about the abuse of the recently distributed equipment.

He said tractors were not maintained and many were being used as buses to ferry people in rural areas, while others “spend their time parked at beer halls”.

“There are times when tractors are used to carry 10 crates of beer when they should be used for work in the fields. I know there are transport problems, but that is not a passport to abuse tractors,” he said.—Sapa-dpa

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