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Harare Statistical Office Posts April Inflation Over 1,042%

Zimbabwe's Central Statistical Office released a much-awaited April inflation report on Friday, two days later than expected, which as widely expected put 12-month inflation over the 1,000% level at 1,042.9% compared with 913.6% in March.

The state statistics office's postponement of the release of the report led observers to speculate that Harare was reluctant to make the data public for fear that the breaching of the 1,000% threshold would jolt inflationary expectations and fuel price rises.

Statistical Office chief Moffat Nyoni said the surge of nearly 130 percentage points in a month was driven by soaring costs of rent, postage and services like hairdressing.

Such hyper-inflation has hit all sectors of the economy, with banks no exception. The Zimbabwe Independent weekly paper reported that the financial sector faces a fresh crisis with five large banks piling up huge losses on treasury bill portfolios because of a distorted interest rate structure and official pressure to purchase T-bills.

Losses on T-bills whose yields are far less than the cost of financing such holdings, are seriously eroding the capital foundations of the banks, the paper said.

For further insight into the brewing crisis in Zimbabwe's banks, reporter Blessing Zulu spoke with David Mpamhadze, former Trust Bank chief economist, about how banks are being battered by hyper-inflation and a distorted interest rate structure.

More reports from VOA's Studio 7 for Zimbabwe...