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Zimbabweans need to fight the 'inflation dragon'
Mail & Guardian (SA)
August 11, 2006

http://www.mg.co.za/articlePage.aspx?articleid=280499&area=/breaking_news/breaking_news__business/

Zimbabwe's central bank chief urged a collective fight against the "inflation dragon" on Friday, saying it still posed a major threat to the economy despite falling to just under 1 000% recently.

"The successive modest decline in annual inflation over the months for June and July is a welcome development that must re-energise all Zimbabweans to re-commit in the conviction that collectively we can tame the inflation dragon," Gideon Gono said in a statement.

"As we welcome this positive development, I wish to, however, strongly urge the nation to remain … vigilant as the venomous breath of inflation monster is still strong in the economy," he said.

Zimbabwe's annual inflation declined to 993,6% in July from 1 184,6%, the country's statistical office announced on Wednesday.

The Southern African country's annual inflation has been on a rollercoaster ride since December 2004 when it shot up to 622,8%.

It dipped to a comparative low of 123,7% in March 2005 before shooting up again to a peak in May 2006 of 1 193%.

Although inflation has been on the decline since June, life remains tough for millions in Zimbabwe, who are barely able to make ends meet.

Gono expressed concern at the continued wave of "unjustified and ad hoc price hikes", despite a government price freeze order.

Last week, the central bank introduced sweeping currency reforms, including slashing three zeros from the local currency, to fight inflation.

"Whilst the recent package of monetary policy measures is expected to impact favourably on inflation over the next three to six months, the ongoing unscrupulous pricing behaviour by some market players is threatening to reverse the gains already registered on the inflation front," Gono said.

Zimbabwe's economy has been on a downturn for the past seven years, dogged by runaway inflation and massive unemployment. At least 80% of the population lives below the poverty threshold.

However, President Robert Mugabe blames the recession on the imposition of targeted sanctions by Western nations following contentious presidential elections.

Critics also blame the country's economic problems on the controversial seizure of white-owned farms to give landless blacks, often without any farming expertise, saying it has wreaked havoc on agricultural output. -- Sapa-AFP

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