Zimbabwe inflation now over 1 million percent

A May 21, 2008 article by Associate Press writer Angus Shaw says the hyperinflation in Zimbabwe is escalating:

HARARE, Zimbabwe --Weary Zimbabweans are facing a new wave of price increases that will put many basic goods even further out of their reach: A loaf of bread now costs what 12 new cars did a decade ago.

Independent finance houses said in an assessment Tuesday that annual inflation rose this month to 1,063,572 percent based on prices of a basket of basic foodstuffs. Economic analysts say unless the rate of inflation is slowed, annual inflation will likely reach about 5 million percent by October.

As stores opened for business Wednesday, a small pack of locally produced coffee beans cost just short of 1 billion Zimbabwe dollars. A decade ago, that sum would have bought 60 new cars.

And fresh price rises were expected after the state Grain Marketing Board announced up to 25-fold increases in its prices to commercial millers for wheat and the corn meal staple.

The economy was on shop clerk Jessica Rukuni's mind as she left the public swimming pool in downtown Harare's central park with three disappointed children. She found the new admission price of 100 million Zimbabwe dollars -- 30 U.S. cents -- out of reach.

"The point is that it's far too much for most people who don't get U.S. dollars," she said.

Her income is the equivalent of about one U.S. dollar a day, and her family has one basic meal daily.

The collapsing economy was a major concern of voters who dealt longtime President Robert Mugabe a defeat in March 29 elections. His challenger, Morgan Tsvangirai, topped the poll but did not win the simple majority needed to avoid a runoff. The two face each other in a second round June 27.

Mugabe was to officially launch his runoff campaign with a rally at his party's headquarters in Harare on Sunday, the state-run Herald newspaper reported Wednesday.

The opposition's campaigning has been hampered by violence blamed on Mugabe's government and party. The opposition claims Tsvangirai is the target of a government assassination plot and he has been out of Zimbabwe since shortly after the March 29 first round. He plans to return to Zimbabwe to campaign for the runoff once security measures are in place, his aides have said.

Mugabe, speaking as he reviewed graduating police cadets Wednesday, said the opposition was fanning violence. Independent observers have said that while there have been some retaliatory attacks by the opposition, the vast majority of the attacks have been carried out by Mugabe supporters.

Mugabe accuses the United States, the European Union and especially former colonial ruler Britain of using their economic influence to back his opponents and bring about his ouster. He has severed ties with the International Monetary Fund, the World Bank and other financial organizations.

Zimbabwe's official annual inflation was given by the government as 165,000 percent in February, already by far the highest in the world. The government has not updated that -- the state statistical service has said there were not enough goods in the shortages-stricken shops to calculate new figures.

The economic decline has been blamed on the collapse of the key agriculture sector following the often violent seizures of farmland from whites. Mugabe claimed the seizures begun in 2002 were to benefit poor blacks, but many of the farms went to his loyalists.

"The crunch is going to come when local money is eroded to the point it is no longer acceptable" in commercial activities or as earnings, especially by longtime ruler Mugabe's loyalists, said independent Harare economist John Robertson.

Already, more transactions are being done in U.S. dollars, both openly and in secret.

Manufacturing industries, running at below 30 percent of their capacity, reported growing absenteeism by workers facing soaring commuter bus fares.