LAST week, after an inordinately prolonged delay, the Central Statistical Office (CSO) released Consumer Price Index (CPI) and inflation data, although only for July 2008.
At one time such data was forthcoming withinÂ two weeks of month-end, when it was still meaningful and of value to the private sector, but for most of the last year either the data has been wholly withheld, or has been released very, very belatedly, when its impact and usefulness would be of negligible extent.
Â This tardy issuance of key economic facts has generally not been the fault of CSO, but of government, which has recurrently barred or hindered release for fear of popular reaction being very negatively focused upon government and its abysmal failure to ensure a virile, viable economy.
Not only is the extraordinary belated issuance of CPIÂ andÂ inflation data highly prejudicial to effective private sector economic strategisation and formulation of operating policies but, once the data is eventually forthcoming, its veracity is necessarily and inevitably in doubt.Â Â
In part, that doubt is fuelled by the delays that have occurred, for such delays unavoidably stimulate cynicism and scepticism as to the credibility of the released information, with pronounced suspicions that government has motivated â€œdoctoringâ€ of the data in order to minimise negative assessment of governmental policies and actions.
Yet a further reason for the private sector, and others,Â to be unable to view the alleged CPI and Inflation statisticsÂ with any substantiveÂ credibility is the awareness that the data is compiled having regard to â€œcontrolledâ€ prices as foolishly, ineffectively and destructively prescribed by the National Incomes and Prices Commission (NIPC), instead of the actual prices payable by the population. The hard fact is that virtually no goods are available for purchase in the formal sector, save and except from foreign-currency licensed shops (FOLIWARS) and from others unlawfully selling only against foreign currency payments.
Thus, almost all the publicâ€™s purchasing of goods is either within the black market, where controlled prices are not applied, or is funded in foreign currency, which currency is generally sourced at gargantuan premiums within the â€œalternativeâ€, unofficial money markets.
Hence, the real cost of goods is usually in a range of anything between 5 and 20 times the controlled prices, but the CSO uses the controlled prices to compute CPI and, therefrom, to determine inflation rates. Even in instances where goods are availableÂ at the prices prescribed by NIPC, fewÂ can purchase them at these prices, for almost all traders demand payment in cash, and will only accept cheque payments if they incorporate a massive premium (usually in the range ofÂ 400%Â to 1 000%).
But most of the population cannot access a sufficiency of cash to fund their basic, essential purchases, let alone anything else and therefore, although most reluctantly, many do pay the extortionate premiums demanded for acceptance of cheques. (of course, with inflation soaring upwards daily, and it taking up to five to seven days for cheque clearances to be effected, it is unsurprising that there is a great reticence to accept cheques, unless they incorporate a substantive compensation for the inflation that will occur between date of acceptance and date of payment).
The magnitude of inflation is further very intensively magnified by the immensely pronounced scarcity of foreign currency, which has enabled illegal trafficking in foreign exchange to thrive. The Reserve Bank, supportedÂ by the National Economic Conduct InspectorateÂ (NECI), the Zimbabwe RepublicÂ Police (ZRP), the NIPC,Â and others, have vigorously sought to curb such foreign currency trading, primarily by resorting to ever-greater regulation and control and also by constant threats, fulminations and sabre-rattling against those engaged in such trading.
Â But both the controls, and the menaces and declarations of â€œbig stickâ€ actions, have not only failed to curb the unofficial foreign currency markets, but have driven the exchange rates within these markets ever higher.
Whilst there are innumerable causes of Zimbabweâ€™s horrendous inflation, including grossly excessive governmental spending and consequentialÂ past exceedingly great printing of money, in recent times the most substantiveÂ cause of Zimbabweâ€™s gargantuan inflation has been the impact of alternative market currency exchangeÂ rates upon cost of imports and production, and upon the populaceâ€™s accessing of foreign currency in order to obtain goods absolutely basic and essential to its needs, not otherwise available (including maize meal, flour, sugar, milk, cooking oil, salt, bread, candles, petroleum products, and much else).
Admittedly, yet another major cause of Zimbabwean inflation is the catastrophic decline in productivity, with the manufacturing sector operating at one-fifth of its output levels of 6 years ago, and with agricultural production having decreased by approximatelyÂ two-thirds from past attained levels. And the greatest causes of the decrease in productivity are again the massively great controls which government seeks to wield and exert upon all facets of the economy. If government were willing to privatise parastatals, the infrastructural collapse would be halted and reversed, to the benefit of national productivity. If government would remodel its land reform, tenure and redistribution programme, instead of seeking total control of land, agriculture could be progressively restored to former levels of glory.
Thus, clearly and not credibly contestable, governmentâ€™s control-freak approach is the principal cause of the most pronounced hyperinflation prevailing anywhere in the world, and the third highest level of hyperinflation in recorded history (and still rising!). According to CSO, year-on-year inflation to July, 2008 was 231 162 000%, whilst inflation for the month of July was stated to be 2 600, 2%. In reality, the year-on-year inflation probably exceeded 400 million%, and the month-on-month inflation for July will undoubtedly have been in excess of 3 000%.
Agonisingly worse is that inflation in August and September, 2008, and continuing into October, was indisputably even higher, and it is probable that by the end of the present month, annualised inflation will exceed one billion%. Even worse is that there can be no expectation of change, and a curb to inflation, until a genuinely unified government is operational, sound international relations are restored and yieldÂ significantÂ foreign currencyÂ inflows, economic deregulation is aggressively pursued (including the burial of NIPC, and the cessation of cash withdrawal limits), and genuine efforts are made to restoreÂ productivity. Until all that happens, the governmental control freaks will continue to fuel inflation, destroying the remnants of the economy, and condemning Zimbabweans to ever greater suffering.