Inflation in Zimbabwe went up 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.
The annual inflation rate shot up to 20.85 percent in October, statistics agency Zimstat said, from 5.39 percent in September after the dollar shortage led to a collapse in Zimbabwe’s parallel ‘bond note’ currency, triggering sharp price hikes in many goods and services.
That has resulted in fear amongst citizens who are still traumatised by the hyperinflation era, which ended when Zimbabwe was forced to abandon its currency and adopt the U.S. dollar in 2009.
A number of businesses in Zimbabwe are now demanding cash in U.S. 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.
On a monthly basis, prices jumped by 16.44 percent in October from 0.92 percent in September, Zimstat said.
“This was expected after the jump in prices we saw last month but it’s more than what I had forecast,” said Tony Hawkins, a professor of business studies at the University of Zimbabwe.
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 discontinued publishing official inflation data in September 2008 when it reached 236 million percent, however the International Monetary Fund put the figure at 500 billion percent. The statistics agency resumed running inflation figures in February 2009.
Mthuli Ncube, the finance minister announced on Oct. 2 the budget deficit, which is expected to reach double digits this year, was fuelling inflationary pressures and could hobble the economy.
The economic crisis will prove to be a major challenge for newly elected President of Zimbabwe – Emmerson Mnangagwa.
