Zim inflation at record

HARARE – Zimbabwe’s annual inflation rate vaulted to a record high in February, driven by a surge in rental, transport and education fees, blighting prospects of a quick recovery for country’s battered economy.

The consumer price index rose by 782 per cent year-on-year in February from 613,2 per cent in January, the Central Statistical Office (CSO) said on Friday. The previous all-time high for the consumer price index (CPI) was 622,8 per cent hit in January 2004.On a monthly basis, the CPI rose 27,5 per cent from 18,6 per cent in January.”Rent, transport, college and tertiary fees contributed the highest to the annual inflation figure,” the CSO said in a statement accompanying the release.Zimbabwe’s inflation is the highest in the world, according to the International Monetary Fund.”There are no prospects for recovery because of central bank quasi-fiscal spending which is fuelling money supply growth at a time when industry is shutting down.There is too much money chasing too few goods,” said one analyst.He was referring to the practice of the Reserve Bank of Zimbabwe of issuing bills to mop up excess liquidity.Analysts said the policy is fuelling money supply growth as the bills were being issued at astronomical rates for only 91 days, meaning after that period more money is injected into the market.An acute shortage of foreign currency has resulted in scarce fuel supplies, which have pushed up transport costs.House rentals have surged following the government’s controversial clean-up operation last year, which destroyed homes and left hundreds of thousands of Zimbabweans without shelter.Once a regional breadbasket, Zimbabwe has grappled with rampant inflation during six years of recession, fanning shortages of foreign exchange, fuel and food, all widely blamed on mismanagement by President Robert Mugabe’s government.- Nampa-ReutersThe previous all-time high for the consumer price index (CPI) was 622,8 per cent hit in January 2004.On a monthly basis, the CPI rose 27,5 per cent from 18,6 per cent in January.”Rent, transport, college and tertiary fees contributed the highest to the annual inflation figure,” the CSO said in a statement accompanying the release.Zimbabwe’s inflation is the highest in the world, according to the International Monetary Fund.”There are no prospects for recovery because of central bank quasi-fiscal spending which is fuelling money supply growth at a time when industry is shutting down.There is too much money chasing too few goods,” said one analyst.He was referring to the practice of the Reserve Bank of Zimbabwe of issuing bills to mop up excess liquidity.Analysts said the policy is fuelling money supply growth as the bills were being issued at astronomical rates for only 91 days, meaning after that period more money is injected into the market.An acute shortage of foreign currency has resulted in scarce fuel supplies, which have pushed up transport costs.House rentals have surged following the government’s controversial clean-up operation last year, which destroyed homes and left hundreds of thousands of Zimbabweans without shelter.Once a regional breadbasket, Zimbabwe has grappled with rampant inflation during six years of recession, fanning shortages of foreign exchange, fuel and food, all widely blamed on mismanagement by President Robert Mugabe’s government.- Nampa-Reuters