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Wednesday, July 30, 2008

Case study: Zimbabwe

Zimbabwe inflation soars to 2.2m% (Guardian)

Zimbabwe's official rate of annual inflation has hit 2.2m%, the country's central bank said today – a 13-fold increase on the last official rate, in February. "Statistics provided by the CSO [Zimbabwe's central statistical office] indicate that [inflation] is now at 2.2m%," the AFP news agency quoted the bank's governor, Gideon Gono, as saying in a speech in Harare.

Inflation has spiralled wildly amid an almost complete collapse of the Zimbabwean economy in recent years, which has prompted around 3 million people to flee the country for South Africa. An estimated 80% of Zimbabwe's population live in poverty, and life expectancy is 37 for men and 34 for women, the world's lowest.

The official inflation rate takes into account goods subject to official price controls, which are almost impossible to obtain. Economists estimate that the real annual inflation rate for last month was around 9m%, which could rise to about 20m% in July. In November last year, the head of the CSO, Moffat Nyoni, told state radio it was in effect impossible to calculate the inflation rate properly due to "date gaps" caused by a lack of products in shops.

Today, Nyoni told AFP the new, 2.2m% rate was the best estimate possible. "The information was based on fewer observations than we would be confident with, due to scarcities," he said. "However, with the information we have managed to obtain, this is the rate of inflation." In May, the country's central bank tried to keep pace with galloping price rises by issuing a new Z$50bn bank note, currently worth about 30p.

Zimbabwe's opposition and outside critics say the country's president, Robert Mugabe, fatally undermined a once-thriving economy with a series of disastrous policies, notably the seizure of white-owned farms, many of which have fallen into ruin.
Adenda 10/10: Zimbabwe inflation hits 231 million per cent
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