Zimbabwe inflation passes 100,000%

Zimbabwe, the land of Mugabe. Zimbabwe is a classic case of how inflation can make life hell for people. Experts say it all started with Mugabe’s regime. Whatever may be the reason, the basic flaw in Zimbabwe’s economy is that Zimbabwe lost its ability to feed itself.
So, if you don’t have enough agriculture commodities the prices are bound to go up. This is one lesson India can learn from Zimbabwe. India’s wheat, rice, pulses and edible oil production is not enough to keep pace with the growth the country is witnessing. That is why Indian government is worrying about the rising inflation rates. It was above 5% last week.
However, it is not anywhere near Zimbabwe. Zimbabwe’s skyrocketing inflation -- now the world’s highest, running at more than 100,000 per cent a year -- keeps the cost of living rising. In 1979, when Mugabe’s nationalist rebels overthrew the white-dominated government of Rhodesia, and changed the name of the country to Zimbabwe, thousands of commercial farms managed to grow enough food to export throughout the region.
At present, more than a decade of mismanagement and neglect has dropped agricultural production to pre-colonial levels. This year, Zimbabwe’s shortfall in maize is 360,000 tonnes, and its shortfall in wheat is 255,000 tonnes.
Streets of Zimbabwe are dotted with shopping mall. That shows that there is food on the shelves, but all of it highly priced.Massive department stores, built for a time when farmers from miles around would come to do their weekend shopping, are full of clothes, but without customers.
With cash almost a worthless possession, people have started investing in something different. They stack bags of maize meal in their homes. The situation in Zimbabwe has hit several Indians badly. Many of the Indian businessmen in Zimbabwe, especially Gujaratis, are finding it tough to do trade there.
Because, a sausage sandwich sells for 30 million Zimbabwe dollars, or about US $1.25. A 30-pound bag of potatoes cost 90 million in the first week of March. Now that same bag costs 160 million.
So, Zimbabwe is an example for the world how inflation can ruin a country, which does not produce enough food for itself.
The official rate of annual inflation in Zimbabwe has rocketed past the 100,000% barrier, by far the highest in the world, the state central statistical office said yesterday. Second-placed Iraq has inflation of 60%, according to international estimates.
In a brief statement, the statistics office said inflation rose to 100,580% in January, up from 66,212% in December.
The new official figure was still well below the rate calculated by independent analysts. They estimate the real inflation is closer to 150,000%, citing supermarket receipts showing that the price of chicken rose more than 236,000% to 15m Zimbabwe dollars a kilogram between January 2007 and January 2008. Slower increases in prices of sugar, tea and other basics bring down the average to around 150,000%.
Zimbabwe, a former regional breadbasket, is facing acute shortages of food, hard currency, gasoline and most basic goods in an economic meltdown blamed on disruptions in the agriculture-based economy after the seizures of thousands of white-owned commercial farms began in 2000, accompanied by political violence and turmoil.
Economic hardship is a key issue in national elections scheduled for March 29 in which President Robert Mugabe, who turns 84 on Friday, is facing the biggest challenge to his hold on power since he led the nation to independence in 1980.
Inflation, food shortages and the crumbling of power, water, sanitation, roads, phones and communications and other utilities have fuelled deep divisions in the ruling Zanu-PF party.
In early October the state central statistical office gave official inflation at just below 8,000%. It then suspended its monthly updates because there was not enough in the shortage-stricken shops to calculate a regular basket of goods.
November’s already dizzying rate of 24,470% was announced in January and earlier this month the official rate for December was given as 66,212%, a dramatic escalation in the space of a month.
The National Incomes and Prices Commission, the government’s price control body, this month allowed sharp increases in the prices of the corn meal staple, sugar, bread and other basics in a bid to restore viable operations by producers and return the goods to empty shelves.
But the new prices were still roughly half the price demanded on the black market and were unlikely to guarantee regular supplies to food stores.
Executives at a milling company producing corn meal said the price increase allowed by the government was already overtaken by soaring production costs and gasoline prices and the National Bakers Association said bread shortages were set to worsen unless the price of a loaf was nearly doubled to more than 5m Zimbabwe dollars for a regular loaf.
Gross domestic product in Zimbabwe fell from about $200 in 1996 to about $9 a head last year.