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Inflation shocker: 1 700 000%
Kuda Chikwanda, The Independent (Zimbabwe)
May 30, 2008

View article on the Zimbabwe Independent website

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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