Zimbabwean inflation soared last month to its highest level since 2008, official data showed on Tuesday, after a severe dollar shortage led to a surge in prices of food, drinks and clothes.
Statistics agency Zimstat said the annual inflation rate shot up 20.85% in October from 5.39% in September after the dollar shortage led to a collapse in Zimbabwe’s parallel currency called the bond note, triggering sharp price hikes in many goods and services.
This has sent a ripple of fear among citizens still traumatised by the hyperinflation era, which ended when Zimbabwe was forced to abandon its currency and adopt the US dollar in 2009.
Some businesses in Zimbabwe are demanding payment in US dollars only and have raised prices by more than three times for the majority of Zimbabweans who pay for their goods using the bond note, mobile money or bank cards.
Prices jumped 16.44% in October from 0.92% in September, Zimstat said.
“This was expected after the jump in prices we saw last month but it’s more than I had forecast,” said Tony Hawkins, a professor of business studies at the University of Zimbabwe.
“Authorities will probably say it’s a one-off spike, but how many people are going to believe that? It now makes a mockery of the official inflation forecast of 5% next year.”
Prices of basic goods such as meat, cooking oil and flour rose when the value of the bond note and electronic dollars collapsed on the parallel market last month, leading to panic buying by consumers.
Zimstat stopped publishing official inflation data in September 2008 when it reached 236,000,000%, but the International Monetary Fund put the figure at 500,000,000,000%.
Finance Minister Mthuli Ncube said on October 2 that the budget deficit, expected to reach double digits this year, was fuelling inflationary pressures and could hobble the economy.
The economic crisis is a major challenge for President Emmerson Mnangagwa, who won a disputed vote on July 30 in the first election in the country since Robert Mugabe was removed by the army a year ago after nearly four decades in power.
Teachers unions last week petitioned the government to pay them in US dollars or increase their salaries, saying the cost of living had increased faster than their salaries.
Business Day Live