Saturday, December 8, 2007

Zimbabwe's inflation tops 1,000 percent

From the BBC

The poor state of the economy is having an effect on infrastructure Zimbabwe's inflation rate has surged past the 1,000% mark signalling that the African country is struggling to keep its economy functioning normally. The annual rate of price growth was 1,042.9% in April, the Central Statistics Office (CSO) said, having risen 129 percentage points from March. It means average goods are about 11 times as expensive in April 2006 as they were 12 months earlier.

Zimbabwe is suffering from shortages of food, fuel and foreign currency. President Robert Mugabe blames domestic and foreign enemies for the problems. Many analysts put the responsibility firmly at the ruling party's door, claiming the government made the situation worse when it seized control of land owned by white farmers, which triggered a sharp drop in production and exports of agricultural goods.

Zimbabwe is a country that is blighted by crumbling urban infrastructure. There are regular water and power cuts, while the cost of everyday foods has surged. A loaf of bread now costs between Z$80,000 - Z$110,000 (79 US cents - $1.08) up from about Z$7,500 last year, when the price was controlled by the government.

A carton of orange juice costs about Z$500,000 and a kilo of beef up to Z$1m. "Business quotations are not valid for more than two days," an office manager in Harare told the BBC News website. "Actually I have one in front of me which says it is valid for 24 hours. Prices can literally double overnight," she said.

In January, the government introduced a Z$50,000 "bearer cheque" worth 49 US cents, to become the highest value currency note. It is not enough to buy a copy of the daily Herald newspaper at Z$80,000.

Housing, education and transport costs also have jumped, while the unemployment rate means that almost two out of every three Zimbabweans are out of work. The country is struggling to pay civil servants and is thought to owe money to neighbours such as South Africa and Mozambique from whom it is been importing electricity and fuel.

The latest inflation data was to have been released on Wednesday, but the announcement was postponed, which only led to further panic about the economic crisis.