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Zimbabwe
inflation above 1200 pct, blow to Mugabe
Stella Mapenzauswa,
Reuters
September 15, 2006
http://za.today.reuters.com/news/NewsArticle.aspx?
HARARE (Reuters)
- Zimbabwe's annual inflation rate climbed to a record high above
1,200 percent in August, dealing another blow to President Robert
Mugabe's hopes of pulling the southern African nation out of a deepening
economic crisis.
Mugabe has singled
out the country's inflation rate, the highest in the world, as the
biggest hurdle to recovering from an eight-year recession widely
blamed on his government and marked by chronic shortages of foreign
currency, fuel and food.
Unemployment
has soared to over 70 percent and salaries have failed to keep up
with hyperinflation.
Official data
released on Friday showed the consumer price index (CPI) leapt to
1,204.6 percent in the year to August, reflecting increases in the
cost of transport, school fees and motor fuels.
The figures
cast a pall on Mugabe's government, which earlier this week cheered
nearly half a billion dollars worth of mainly foreign loans, including
$200 million from China to boost Zimbabwe's important but struggling
agriculture sector.
Soaring inflation
and poor wages were key factors that prompted the Zimbabwe
Congress of Trade Unions, the nation's largest union, to try
to take to the streets on Wednesday in a series of nationwide marches.
The protests
were aborted after riot police armed with baton sticks assaulted
and arrested scores of trade unionists.
ZCTU, which
charges that its leaders were badly beaten while in custody, says
workers have borne the brunt of the unravelling economy, which has
left many urban dwellers in poverty.
Analysts said
on Friday that the latest inflation data showed recovery prospects
remained a distant dream.
"The outlook
is still very dim, we are going downhill still and people's income
will continue to be eroded," said leading private economic
consultant John Roberston, mainly citing unbridled government spending.
"They are
paying large subsidies and printing money, which promptly goes looking
for foreign currency on the black market. And remember, it is the
parallel market exchange rate that fuels inflation rather than the
official rate."
The Zimbabwe
dollar is officially quoted at 250 to the dollar, but is hovering
around 600 on the thriving informal market spawned by chronic hard
currency shortages resulting from low levels of exports.
The country's
struggling firms say they are forced to obtain foreign exchange
for crucial imports from the underground market and have to factor
the cost into their retail prices.
Zimbabwe's crisis
has been worsened by international donors' suspension of lending
due to policy differences with the government, especially its controversial
seizure of white-owned commercial farms for redistribution among
blacks whom Mugabe says were dispossessed during colonialism.
In power since
independence from Britain in 1980, Mugabe denies criticism that
he has mismanaged the economy. He accuses the West of engaging in
economic sabotage to punish him for the land reforms.
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