Page last updated at 09:41 GMT, Tuesday, 19 August 2008 10:41 UK

Zimbabwe inflation rockets higher

Zimbabwe dollars
Zimbabwe revalued its currency this month in an effort to curb hyper inflation

The rate of inflation in Zimbabwe jumped to just over 11,250,000% in June, official figures show.

"It gained 9,035,045.5 percentage points from the May rate of 2,233,713.4%," said state media quoting the Central Statistical Office (CSO).

However, experts believe the actual rate of inflation may be much higher.

Zimbabwe is in the midst of a dire economic crisis with unemployment at almost 80%, most manufacturing at a halt and basic foods in short supply.

High money supplies have also been fuelling hyperinflation. Critics have accused President Robert Mugabe's government of printing money to finance his election campaign and prop up the economy. Month-on-month inflation in the country accelerated to 839.3% from 433.4%.

Chaos

"Our inflation figures are way above that, but what it tells us is that the productive base of the economy has really shrunk," said one unnamed economist at a domestic bank.

"We really need to change the way we do business," he added.

Zimbabwe, once one of the richest countries in Africa, has descended into economic chaos largely blamed on the policies of President Mugabe.

Mr Mugabe has denied he is ruining the economy, laying the blame instead on international sanctions he says have been imposed against Zimbabwe.

Since his controversial re-election in June, Mr Mugabe has been in talks about a power-sharing deal with the opposition party, the Movement for Democratic Change (MDC).

However, the two side have shown no sign of coming to an agreement and the country's economic situation has been worsening.

'Economic emergency'

Earlier this month, Zimbabwe's central bank chief called for a six-month freeze on prices and wages in a bid to rein in spiralling inflation.

"Zimbabweans must realise that the country is in a practically binding state of socio-economic emergency," Reserve Bank governor Gideon Gono said.

"As such, there is need for a universal moratorium on all incomes and prices for a minimum period of six months," he added.

His comments came weeks after the bank revalued its currency in an effort to curb hyperinflation - lopping 10 zeros off the Zimbabwe dollar making 10bn dollars now equal to one dollar.

But the move had little effect on strengthening the currency, which has since weakened from the Z$6 level againt the US dollar to around the Z$18 mark.




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