May 17, 2007 / 12:59 PM / 10 years ago

Zimbabwe inflation hits record high

HARARE (Reuters) - Zimbabwe’s annual inflation jumped to a record 3,700 percent in April in a stark sign of the economic turmoil blamed on government policies that has left four in five people jobless.

<p>A Zimbabwean woman holds a loaf of white bread and its cost of Z$45,000 ($ 0.45) in the capital Harare in this February 16, 2006, file photo. Zimbabwe's annual inflation jumped to a record 3,700 percent in April in a stark sign of the economic turmoil blamed on government policies that has left four in five people jobless. REUTERS/Howard Burditt</p>

The figures showing consumer prices doubled last month are likely to step up pressure on President Robert Mugabe as he cracks down on an increasingly vocal opposition and deflects Western criticism of his government.

“This is a classic case of hyper-inflation and it shows we are going downhill and there is no visible sign that the government has the capacity to end this crisis,” said consultant economist John Robertson.

The Central Statistical Office (CSO) said on Thursday consumer prices jumped 3,713.9 percent year-on-year in April from 2,200.2 percent previously. The monthly rate of increase was 100.7 percent.

Mugabe, the sole ruler since independence, blames Western sanctions for the state of Zimbabwe’s economy. Critics say it has been hit by Mugabe’s controversial policies such as his seizure of white-owned farms to redistribute to blacks.

The southern African nation faces food shortages this year after a deficit of the staple maize crop. Officials warned of bread shortages on Wednesday as it emerged wheat growers had so far planted only 10 percent of their targets.

SEVERE SHORTAGES, UNEMPLOYMENT

Ordinary Zimbabweans fear there is no strategy in place to tame inflation. “I think the government should do something urgently because we are suffering,” said Martha Ruzive, a 46-year-old city council cleaner.

Like many Zimbabweans, she makes hardly enough money to pay for her transport to work.

The recession has pushed unemployment to around 80 percent and sparked shortages of foreign exchange, food and fuel.

Analysts said the central bank’s projection that inflation would ease to between 300-400 percent was unrealistic. The figure has already passed the International Monetary Fund’s year-end forecast of 3,000.

Labor unions are demanding the government and employers raise the minimum wage to the poverty level, currently pegged at 1.7 million Zimbabwe dollars -- $6,800 on the official market but $50 on the black market.

This week Mugabe signed a law establishing an incomes and prices commission which would set prices and wages. Analysts say this will not work without increased productivity and improved foreign currency, fuel and electricity supplies.

Analysts said the Reserve Bank of Zimbabwe could be forced to scrounge for foreign currency on the black market, further weakening the currency and pushing up food prices.

Mugabe has defended his land reforms as measures to redress colonial land imbalances that left 70 percent of the most fertile land in the hands of 4,500 white farmers.

Our Standards:The Thomson Reuters Trust Principles.
0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below