Cato Institute (Washington, DC)

Zimbabwe: New HHIZ Puts Inflation at 531 Billion Percent

analysis

Zimbabwe is the first country in the 21st century to hyperinflate. In February 2007, Zimbabwe's inflation rate topped 50% per month, the minimum rate required to qualify as a hyperinflation (50% per month is equal to a 12,875% per year). Since then, inflation has soared.

The last official inflation data were released for June and are hopelessly outdated. The Reserve Bank of Zimbabwe has been even less forthcoming with money supply data: the most recent money supply figures are ancient history—January 2008.

Absent current official money supply and inflation data, it is difficult to quantify the depth and breadth of the still-growing crisis in Zimbabwe. To overcome this problem, Cato Senior Fellow Steve Hanke has developed the Hanke Hyperinflation Index for Zimbabwe (HHIZ). This new metric is derived from market-based price data and is presented in the accompanying table for the January 2007 to present period. As of 26 September 2008, Zimbabwe's annual inflation rate was 531 billion percent.

The HHIZ will be updated weekly and available on the Cato Institute's web site. www.cato.org/zimbabwe

*Steve H. Hanke is one of the world's leading experts on exchange-rate regimes. He has played a prominent role in designing and implementing monetary reforms that have stopped very high or hyperinflations in eight countries.

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