In a calculation of astonishing precision, the country’s Central Statistical Organisation this week revealed that inflation in the year until June stood at 11,268,758.9 per cent, with the monthly rate at 839.3 per cent, by far the highest in the world. Independent analysts put the true figure far higher, but even at the official figures the phenomenon is in the process of making Zimbabwean money meaningless.The email includes photographs depicting how large piles of currency are required to cover normal expenses such as groceries and restaurant bills. The message notes that even poor people were technically billionaires because so much local currency was required to buy even everyday items. Since the photographs were taken, the Zimbabwe currency has been "revalued" to remove 10 zeroes, making 10bn dollars equal to one dollar. However, while this means that ordinary citizens will no longer be instant billionaires because the numbers on notes is now more realistic, the change does nothing to help an economy spiraling out of control. The National article explains:
The dramatic rise in the price of oil, and increasing food costs, have put inflation up worldwide, but the extra dimension in Zimbabwe, which puts it far into the realms of hyperinflation, is its plummeting exchange rate. Three weeks ago, when the currency was revalued to knock off 10 zeroes in a cosmetic move that did nothing to address the underlying issues, the Zimbabwe dollar traded at Z$140 billion, or Z$14 in new notes, to one greenback (Dh3.67). This week it stood at Z$120 to the US dollar – or Z$1.2 trillion in old money.Analyst's have blamed controversial Zimbabwean President Robert Mugabe's mismanagement for the country's predicament. An August 2008 BBC article notes:
Zimbabwe is in the midst of a dire economic crisis with unemployment at almost 80%, most manufacturing at a halt and basic foods in short supply.Unfortunately, Zimbabwe is descending into hyperinflation driven economic chaos. The Reserve Bank of Zimbabwe is reportedly allowing some retail and wholesale businesses to charge for goods in other currencies including US dollars and South African Rand. Hopefully, a recently brokered power-sharing deal between Mugabe and opposition leader Morgan Tsvangirai may eventually lead to economic recovery.
High money supplies have also been fuelling hyperinflation. Critics have accused President Robert Mugabe's government of printing money to finance his election campaign and prop up the economy. Month-on-month inflation in the country accelerated to 839.3% from 433.4%.
Last updated: 12th September 2008
First published: 12th September 2008
Write-up by Brett M. Christensen