Zimbabwe Inflation Tops 1,000 Percent

Zimbabwe Inflation Tops 1,000 Percent
(AP) HARARE, Zimbabwe
Zimbabwe's annual inflation rate has topped 1,000 percent for the first time, underlining the economic collapse of a country crippled by shortages and where people have to carry bags full of cash even for basic purchases.

Moffat Nyoni, director of the Government's Central Statistical Office, said that inflation for the 12 months to April 2006 was 1,042.9 percent, according to a report on state radio Saturday.

In March the figure was 913 percent. Figures released by Nyoni's office showed 21.1 percent inflation for the month of April alone, fueled by a 27 percent increase in the cost of basic foodstuffs, 24.8 percent in rents, 35.1 percent in fuels such as gasoline and kerosene and 48.1 percent in motor vehicle and health insurance.

The economy has been in free fall since President Robert Mugabe started seizing 5,000 formerly white-owned commercial farms in February 2000.

"We are living with the consequences of (the government's) destructive policies of the past," said economist John Robertson. "They cannot raise the necessary taxes from our shrinking economy."

The radio broadcast said the poverty datum line - absolute minimum consumption needs - for an average family of five reached 37 million Zimbabwean dollars (US$366; euro284) per month at the Government's rate of exchange but only US$148 (euro114) on the more realistic and flourishing black market.

The lowest-paid workers in formal employment - domestic gardeners - earn 2.5 million Zimbabwean dollars a month, but 70 percent of the work force lack regular jobs due to waves of bankruptcies.

Most people get paid by the hour for casual work. Church groups have appealed to employers that the hourly rate should at least cover the price of a loaf of bread, currently 100,000 Zimbabwe dollars.

An estimated 4 million Zimbabweans, many of them skilled professionals, are living outside the country.

Most remaining Zimbabweans make ends meet by growing sweet potatoes and maize on roadsides, railway sidings and plots of vacant land.

A package of the cheapest candy costs 57,000 Zimbabwe dollars, but the maximum denomination note is 50,000 Zimbabwe dollars, forcing shoppers to carry a bag full of money.

Since mobile phones went into service in 1996 as fixed phone services crashed, the price of the cheapest range of phones with a line connection has increased 5,000-fold. The price of a single car battery this year could have bought 14 brand new cars 10 years ago.

There is a joke that toilet paper costs so much that it would be cheaper to use 500 dollar notes.

Robertson said the point of "meltdown" had already been reached for pensioners and others living on small fixed incomes.

An entire life's savings, invested before the 1998 start of the Zimbabwean economy's collapse, is now needed to meet a month's living expenses.

Money from charities or from relatives living abroad is the only means of survival for many elderly. The United Nations estimates at least 3 million of the 12 million population are in need of emergency food aid ahead of next month's harvests.

Mugabe last week announced increases of up to 300 percent in salaries for more than 120,000 government employees including soldiers and police.

Robertson said there was "not a hope in hell" of reaching the government's target to reduce inflation to double digits by the end of the year and it would take five to 10 years to restore production on farms, in mining and industry, even if Mugabe reversed current policies.

Robertson predicted shortage-driven inflation might soon reach 2,000 percent as state employees rushed to spend their pay rises while goods were still in stores. There is currently a nationwide shortage of sugar, while supplies of cooking oil, maize meal and bread are erratic.

"People should get angry and start demanding things happen," said Robertson.