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Zim inflation surges to 526%

19th November 2003

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Zimbabwe's annual rate of inflation, the highest in the world, soared to new levels, reaching 526% in October, according to figures issued yesterday by the state Central Statistical Office (CSO).

Compared with prices a year ago, the cost of living went up 525,8%, against September's annual rate of 456%.

Calculated on a monthly comparison of prices, inflation in the month to the end of October was 25,3%, the highest ever in a single month.

The CSO said that the biggest contributors towards the sharp rise were increases of 1 179% for telephone charges, 983% for vehicle running costs, 952% for school textbooks and 913% for shoes.

Economist John Robertson said the CSO's figures gave an appearance of inflation much lower than the real rate. "It is evident that the recent steep increases in rates and rentals in the Harare area have not been captured, and that education and health fees recorded are being drawn from a narrow sample of state-run facilities," he said.

The CSO also used the controlled prices of basic commodities, like maize meal, the national staple, flour, sugar and fuel, which are ignored by retailers who charge far higher prices.

Economists say misguided economic policies, such as price controls, a regime of rock-bottom interest rates and unchecked state spending, account for the uncontrolled escalation in prices.

President Robert Mugabe accuses "British interests" and "greedy hoarders" for the crisis.

Zimbabwe is described as having the fastest-shrinking economy in the world, with gross domestic product having fallen 40% in the last four years, and estimated to drop 18 percent this year alone.

Export earnings have plummeted to 1977 levels, largely as a result of the destruction of productive agriculture following Mugabe's illegal seizure of white-owned commercial farms.

Stricken by the sudden evaporation of hard currency earnings, mining and manufacturing have recorded similar falls, while the value of the national currency has fallen from 12 Zimbabwe dollars to the US dollar in 1997, to 6 500 Zimbabwe dollars to the US dollar on the semi-official parallel market now.

The government has pegged the rate at 842 Zimbabwe dollars to the US dollar, a rate of conversion ignored even by state departments trying to buy hard currency. – Sapa.
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