Zimbabwe’s official inflation rate has escalated to 2,2-million percent, driving the cost of a loaf of bread to about one-third of a teacher’s monthly salary.
But independent economists swiftly dismissed the government’s latest figure, saying the true rate was several times higher and rising faster than ever.
On Wednesday the central bank governor, Gideon Gono, announced a thirteenfold increase in the last official inflation figure, announced in February, when it was put at about 165 000%. Officials admit that the figure is only an estimate because it is now all but impossible to track the cost of individual goods.
One of Zimbabwe’s most respected economists, John Robertson, said that while inflation was probably about two-million percent in May, it soared again last month.
”I think the June figure is more likely to be 10-million percent and it could turn out to be 15-million percent,” he said.
Salaries have failed to keep pace with daily price increases, so even those with jobs in a country with 80% unemployment are often unable to afford the bus fare to work or more than one meal a day for their families.
Huge queues form outside any bakery selling price-controlled bread, but demand far outstrips supply.
Robertson said inflation was largely being driven by the collapse in the black-market value of the Zimbabwe dollar against the United States dollar, which sets the pricing for imports of foods and other goods.
”At the beginning of July the exchange rate was 27-million percent higher than the same time last year. That becomes the floor for the July calculation. I think we’re heading for 40 or 50-million percent inflation by the end of July,” he said.
Eight weeks ago the central bank issued a Z$50-billion note, the largest available. At the time it was worth about R30; it is now worth about R2,70.
Last year the government tried to curb inflation with price controls that forced shops to slash their prices by up to 80%. But that only led to a short-lived spending spree when people bought up food, electrical goods and furniture at a fraction of their real value.
Since then the shelves of many shops and supermarkets have been largely bare except when the owners are prepared to risk being caught charging prices that reflect the cost of importing goods from South Africa now that Zimbabwe’s own production has largely collapsed.
Hyperinflation has caused a cash shortage because the government cannot print notes fast enough to meet demand. Ordinary people are permitted to draw only Z$100-billion (about R5,40) a day from the banks.
However, the government has made an exception for soldiers, fearing unrest in the military. They are allowed to take out Z$1,5-trillion a day (about R57) and the cash is delivered by the banks to the barracks.
While the parallel rate for the American dollar is Z$270-billion, the official exchange rate remains at Z$30 000. Only a select few at the top of the regime have access to foreign currency at that rate.
It has enabled some of them to buy luxury cars for no more than a few pounds through currency manipulation. —