Zimbabwe inflation at decade high

Zimbabwean inflation soared in October to its highest level since 2008, official data showed on Tuesday, after a severe dollar shortage led to a surge in prices of food, drinks and clothes.

Statistics agency Zimstat said the annual inflation rate shot up to 20.85% in October from 5.39% in September after the dollar shortage led to a collapse in Zimbabwe’s parallel currency, the bond note, triggering sharp price hikes in many goods and services.

This has sent a ripple of fear among citizens still traumatised by the hyperinflation era, which ended when Zimbabwe was forced to abandon its currency and adopt the US dollar in 2009. Some businesses in Zimbabwe are demanding payment in US dollars only and have raised prices by more than three times for the majority of Zimbabweans, who pay for their goods using the bond note, mobile money or bank cards.

Prices jumped 16.44% in October from 0.92% in September, Zimstat said.

“This was expected after the jump in prices we saw last month but it’s more than I had forecast,” said Tony Hawkins, a professor of business studies at the University of Zimbabwe.

“Authorities will probably say it’s a one-off spike, but how many people are going to believe that? It now makes a mockery of the official inflation forecast of 5% next year.”

Prices of basic goods such as meat, cooking oil and flour rose when the value of the bond note and electronic dollars collapsed on the parallel market in October, leading to panic buying.

Zimstat stopped publishing official inflation data in September 2008 when inflation reached 236,000,000%. The IMF, however, put the figure at 500,000,000,000%.

The statistics agency resumed running inflation figures in February 2009.

Finance minister Mthuli Ncube said on October 2 that the budget deficit, expected to reach double digits this year, was fuelling inflationary pressures and could hobble the economy.

The economic crisis is a major challenge for President Emmerson Mnangagwa.

21% the rate of inflation in October, according to Zimstat its highest level since 2008