Inflation Hits 355 000%

YEAR on year inflation for the month of March surged to 355 000% from the February figure of 165 000% as prices rose on the back of increased money supply to finance the 2008 harmonised elections.

 

Top government sources said the inflation figures for March had initially been projected at 406 000%, but were still being computed as the Central Statistical Office (CSO) continues to fiddle with the consumer basket.

“The CSO were instructed last month to change the consumer basket. The basket is forever changing.” said one Ministry of Finance official. “It remains uncertain whether the go ahead will be given to them to release the figures.”

Food and non-alcoholic beverages continued to be the major drivers of inflation in March.

No figures were provided for month-on-month inflation figures for March nor for money supply growth since December last year.

“They are still busy doing that,” the official said. “When they come up with a new basket, they are told to dump certain products and substitute them with cheaper ones. However, they will soon run out of cheaper products to use.”

The CSO acting director, Moffat Nyoni, confirmed that the CSO had been having difficulty in coming up with a stable consumer basket.

“We have the method and the formulae,” Nyoni said. “It is what you feed into the formulae. We have just too many gaps and we find the data available somewhat troubling.”

Nyoni said the CSO had not computed substantive inflation data for the months of February, March and April owing to these challenges.

“The more data we have, the more investigations we conduct, the more confident we become,” Nyoni said.

“However, when we consider the data that we have, we just don’t feel confident releasing inflation figures.”

However, the CSO projection, sources said, has placed inflation for May at over 1 200 000% if the trend continues.

Nyoni would not confirm these developments.

“I am not aware of that. We have not even computed inflation for these past months,” he said.

The figures come at a time the RBZ has introduced higher denomination bearer cheques notes to counter the adverse effects of inflation.

The central bank introduced the $500 million bearer cheques for the public and the $5 billion, $25 billion, $50 billion agro-cheques for farmers. The new notes come hardly two weeks after the introduction of the $250 million bearer cheques.

Economist John Robertson said the acceleration of the year-on-year inflation rate reflected the compounded effect of prices that were rising every week.

“Prior to this, prices used to double once a month, then they doubled twice a month and now they are doubling every week,” Robertson said. “It is a compounding effect causing the rate to accelerate tremendously.”

The CSO last released inflation figures in January when the year-on-year rate was 100 580,2%. Prior to that, the year on year inflation rate for December was 66 212,3%.

By Kuda Chikwanda

Top