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Zimbabwe inflation slows to 1023%
MacDonald Dzirutwe, Reuters
October 11, 2006

http://www.businessday.co.za/articles/world.aspx?ID=BD4A287327

HARARE — Zimbabwe’s annual inflation eased in September but remained the world’s highest as the country grapples with a severe economic crisis critics blame on President Robert Mugabe’s government.

Zimbabwe’s soaring inflation is seen as a major stumbling block to pulling the country out of an eight-year-long recession marked by a jobless rate above 70%, and persistent shortages of foreign currency, fuel and food.

The Central Statistical Office (CSO) said yesterday year-on-year inflation had slowed to 1023,3% in September, down from a record 1204,01% in August.

"You had September 2005, which had one of the highest increases on a monthly basis, which was not repeated this year. So technically, this contributes to the lower figure of annual inflation," said CSO acting director Moffat Nyoni.

On a monthly basis, Zimbabwe’s consumer price index rose 14,8% in September after a 29,2% increase the previous month.

Analysts said price pressures still lurked, pointing to excessive government spending which had seen its domestic debt nearly double to Z$121,4bn ($484m) between June and September this year.

Shunned by western financial lenders, Mugabe’s government has increasingly relied on the local bank sector for money to plug holes in the national budget, and to import food and farming inputs.

"Inflation pressures have not decreased because we still have high money supply growth, wage pressures and high government expenditure," David Mupamhadzi, chief economist at Zimbabwe Allied Banking Group said.

The inflation data came a day after central bank governor Gideon Gono raised the main lending rate by 200 percentage points to 500%.

Zimbabwe’s urban residents have been the hardest hit by skyrocketing prices.

The CSO said an average family of five now needed $539 to survive through a month, compared with $401 in August in a country where an average government worker earns $120.

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