ZIMBABWE’S inflation rate soared to nearly 360% in September, further away from government year-end targets and signalling more gloom for an economy mired in a deepening crisis, official figures showed on Monday.
The inflation figures all but buried Reserve Bank Governor
Gideon Gono’s optimistic predictions of containing it to within two digit figures by January 2006.
President Robert Mugabe’s government has singled out inflation as the biggest scourge to an economy struggling with chronic shortages of food, fuel and foreign currency and unemployment of over 70%.
Figures from the Central Statistical Office showed annual inflation soared to 359,8% in September from 265,1% August, while the month-on-month rate leapt to 33,3% from the previous month’s 8,3%.
The International Monetary Fund warned last week that government spending and high rates of money growth would drive inflation to 400% by the end of the year — way above a target of 80% set by the central bank.
“I don’t think even the Reserve Bank itself still subscribes to that forecast although it has not made this official,” said Witness Chinyama, chief economist at Kingdom Financial Holdings, pointing to rising production costs which he said were forcing companies to push up prices for basic commodities almost daily.
Fuel prices rose by at least 120% last month, pushing transport costs higher for urban commuters whose salaries have failed to keep up with surging prices.
Electricity costs have also more than doubled, piling pressure on private consumers and producers alike.
“At the rate we are going now, even the IMF figure of 400% is looking increasingly optimistic,” Chinyama said.
Inflation has retreated from a record high of 623% in January 2004 but remains among the highest in the world and could soon revisit that peak soon, analysts say.
Zimbabwe’s economy has contracted by more than 30% in the last six years and the IMF predicts another 7% falling gross domestic product (GDP) this year — outpacing the 4% GDP decline in 2004 and against Harare’s own forecasts of 2% growth.
Zimbabwe’s economic woes have been worsened by the withdrawal of international donor aid over policy differences with Mugabe’s government, especially its controversial seizure of white-owned commercial farms for landless black citizens.
Mugabe’s government denies charges of mismanagement and says the economy is being sabotaged by foreign and domestic opponents of its land reform policies – Reuter.