Kuda Chikwanda
29 May 2008
ANNUAL inflation for May galloped to 1 700 000% as the Zimbabwean dollar continued to crash causing prices of goods and services to skyrocket.
A top official in the Ministry of Finance told businessdigest that government has now forecast the figure to reach between 1 800 000% and 2 000 000% for the month of May.
May inflation rose by 961 396 percentage points from the April figure of 732 604% to 1 694 000%.
The 1 694 000% was for the CSO's inflation computations for the period from May 1 to May 23.
Non-alcoholic beverages and cereals continued to be the major drivers.
The official said the Central Statistical Office (CSO) had been conducting weekly computations of inflation for the entire month of May.
"They have computed weekly moving averages on the figure," the official said.
"Last week the figure was 1 694 000% and this week we expect it to hit 2 000 000%. We will only know next week when they compile data for this final week of May."
The annual inflation figure for March stood at 355 000% while that for February was 165 000% but the CSO insists that even these figures were not official.
"As government, our reasonable approximation for June now stands at not less than 4 000 000% and not more than 5 000 000%," the official said.
The weekly moving inflation figure for the first week of May was 1 200 000% according to the source.
However, CSO acting director Moffat Nyoni disputed the figures this week saying inflation figures for May had not yet been computed.
Nyoni insisted that the CSO was experiencing problems with the availability of products which affected the consumer basket used to calculate inflation.
He also said the CSO was yet to compute inflation figures for April despite the removal of duty on food imports.
"The number of observations we use have been affected," Nyoni said.
"It has gone down and this affects the strength of our figures which will be very weak. Inflation is nowhere near that figure. We have a time lag and the May data will be available late in June."
Nyoni however conceded that the figure for March stood at 355 000% saying it had been leaked. He said the figure was not officially released.
businessdigest broke the story on March inflation figures two weeks ago with Nyoni strenuously denying the figures were true.
"The March figure was leaked out," Nyoni said. "I would not like to comment on your figures. In the past, people have come up with their own baskets and inflation figures. I would not recommend the use of these as they don't pass the test."
Economists and the business community said they believed inflation for May would end the month closer to 2 000 000%.
"It is impossible for inflation to end the month at less than 2 000 000%," said businessman David Govere.
"Our calculations show that inflation has already surpassed 1 600 000% in recent weeks."
Economist John Robertson said his estimates for May year-on-year inflation had been 1 800 000%.
"My projections had placed inflation at 1 800 000% for May," Robertson said.
"It seems I was not far off the mark."
Zimbabwe National Chamber of Commerce president Marah Hativagone said the chamber believed the latest inflation figures are accurate.
"We think they are very approximate," Hativagone said. "Whoever is computing those figures must be using what is on the ground. Unlike official CSO figures which are released and far from reality, these figures reflect a basket of commodities that are available."
Inflation has continued to rise steeply on the back of increased money supply, spiralling domestic debt, declining production and scarcities of foreign currency and food.
The Reserve Bank of Zimbabwe has been accused of injecting huge and unsustainable amounts of local currency into official circulation causing inflation to skyrocket.
Several listed companies whose financial years ended between February 29 and March 31 now face suspension if they fail to release inflation-adjusted results owing to the CSO's failure to release inflation figures.
There now appears to be no respite for the general public, as prices of goods continue to rise. Companies have been pushing up their prices in line with the deregulated inter-bank exchange rate.
The Zimbabwean dollar was this week trading at US$1:$620 million, up from US$1:$480 million last week.
A loaf of bread which was selling for $180 000 earlier this year is now going for around $280 million in most shops. It is going for between $400 million and $450 million on the black market. A 2kg packet of sugar which was pegged at $7 million is now selling for $700 million.
A kilogram of meat which was at $30 million is now selling for between $1,5 billion and $2,5 billion.
A 750 grammes bar of soap which at the beginning of the year was $2 million now calls for one to fork out $1,8 billion. In January, a packet of fresh milk was selling at $1,3 million. The same packet now sells for $190 million, while a kilogramme of salt which was selling for less than $2 million is now pegged at $440 million.
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Sounds about right. From what I'm told by friends and family prices of things double every month. 1,700,000% inflation would mean prices double 14 times in a year.
Glyph, haven't you seen Kuba's magicians who can rebuild a wrecked country in three years? :-D
Hey mindy - three years, that's all it will take! How can anyone live with 1,700,000% inflation? 75% of the population should be dead by now! What are they eating - stones?
On 16 February 2006, Gono announced that the government had PRINTED ZWD$21 TRILLION IN ORDER TO BUY FOREIGN CURRENCY TO PAY OFF IMF ARREARS!! He's a smart lad this Gono *lmao*.
In early May 2006, the printing presses were rolling again to produce about ZWD$6trillion to finance 300% INCREASE IN SALARIES FOR SOLDIERS AND POLICEMEN AND 200% FOR OTHER CIVIL SERVANTS. The money was not budgeted for the current fiscal year and the government did not say where it would come from. The one aspect of inflation that a government can actually control kubatana are the wages of public sector employees. The Government is obviously composed of mentally deficient wannabe economists.
In February of 2007 Dr Gono declared inflation ILLEGAL! *LMFAO*. He sounds like King Canute trying to hold back the sea. I declared it illegal so inflation is zero? Idiot!
By June 2007 inflation in Zimbabwe was 11000% from an earlier estimate of 9000%. The IMF estimated a rate of "only" 115000% for December 2007, and 150000% for January 2008.
The government instituted a six-month freeze on wages on September 1, 2007. The excuse given for not releasing figures by the CSO is, "There aren't enough goods on the shelves to observe purchases" see
The Reserve Bank of Zimbabwe issued a ZWD$10Million note in January 2008, roughly equivalent of USD$4. Zimbabwe's inflation rose to 26470.8 percent the rason given for this by the RBZ.....wait for it....."A CONTRACTION OF THE ECONOMY BY SIX PERCENT"!!!!
In April 2008 the RBZ issued a ZWD$ FIFTY MILLION NOTE, which is approximately worth USD$1.20. In May 2008 the RBZ issued "bearer cheques" to the value of ZWD$ ONE HUNDRED MILLION and ZWD$ TWO HUNDRED AND FIFTY MILLION respectively. Ten days later the ZWD$FIVE-HUNDRED MILLION NOTE was printed which is worth about USD$2.00.
Kubatana look at the denominations involved, the devaluation against the United States Dollar(currently ZWD$620million to the USD$1.00) and the time frame, do you know how to do the math or would you like me to show you that too? Inflation of less than 2million percent by June 2008 would be suprising.
Three years? In your wildest dreams! Is there any chance of you letting us know how you arrived at your figure of three years?
Kuba tell us how you think a country can be rebuilt in three years. God you're naive! As for the inflation, do you deny that prices can be doubling every month? Do you even speak to anyone in Zim?
And by the way, who announced that figure of 1,700,000%? THE ZIM GOVERNMENT! Do you think they would make it up to make themselves look bad?
One of these days you really should try thinking before you type.
as of 2005 the estimate for recovery time without outside intervention,(meaning a miracle) was 23yrs, bearing in mind that inflation was a mere 600% when this report was complied I think we can assume 23years and a miracle is an optimistic outlook.
1.7 MILLION %? Wasn't inflation ONLY 165,000% in April? Inflation is not just increasing in Zimbabwe, it's accelerating! You can't keep adding zeros to your currency to increase "buying" power! Will inflation increase by another factor of 10 next month? Is it mathematically possible to have 17 MILLION % inflation?
Sadly, with ZANU-PF/Mugabe running the show - NO ONE will ever invest the kind of money in Zimbabwe to turn it's economic collapse around! It is remarkable what ZANU-PF/Mugabe's policies of "total independence" have wrought.
At what point does the economy just collapse? At what point do Zimbabweans just refuse to accept their own currency in trade? When does the economy collapse to a point where they no longer use money, but return to the barter system?
People are already bartering and from what I hear a lot of transactions are covertly done in forex. Z$ are meaningless.
Well I think economically this is probably pretty bad isn't it? I mean I'm not an economist but inflation of over one and a half million percent must be a little troublesome for King Robert and his Court.
But hey seriously, no way no how a country comes back from this without some serious help. How much are the Elders of the AU going to stump up to rescue Bob the builder?
On average it takes between four and seven years of reconstruction to reverse one year of decline, I think Zimbabwe has a way to go yet.