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Zimbabwe Currency Supply Tightens As Hyperinflation Runs Rampant

  • Ndimyake Mwakalyelye

The prices of essential commodities have soared again in Zimbabwe, reflecting the scarcity of goods and the latest steep downturn in the value of the currency.

The Consumer Council of Zimbabwe said Monday that the price of petroleum had climbed from Z$130,000 to Z$180,000 (US$1.20) a liter recently, while the price of maize meal soared to Z$200,000 for five kilos from Z$110,000 last week. The council further stated that two liters of cooking oil that cost Z$250,000 last week were now fetching Z$600,000. Prices of beef, chicken and other meats also soared.

Employers Confederation of Zimbabwe Chief Executive Officer John Mufukari told reporter Patience Rusere of VOA's Studio 7 For Zimbabwe that prices change periodically throughout the day as sellers try to keep pace with inflation.

A cash crunch in Harare and other cities, meanwhile, has led to a new wrinkle in forex dealings on the parallel or black market whereby those holding bank notes demand a premium of up to 15% to accept a check or bank transfer in exchange.

Business leaders last week pleaded with Reserve Bank Governor Gideon Gono to put more cash into circulation, but the central bank chief refused, saying injecting cash would simply fuel black market currency transactions and inflation.

Financial sources said businesses and individuals are hoarding cash. Such shortages surfaced in 2003 but the current crunch is more severe with 12-month inflation running into several thousand percent, requiring more cash for simple transactions.

Director Godfrey Kanyenze of the Labor and Economic Development Research Institute told reporter Blessing Zulu of VOA's Studio 7 for Zimbabwe, that those in possession of physical currency can now command a premium.

Amid such developments, the rate at which the economy is sinking has become the subject of the latest war of words between outgoing U.S. Ambassador Christopher Dell and Harare. Information Minister Sikhanyiso Ndlovu, disputing Dell's recent statement saying inflation could hit 1.5 million percent by year's end, driving President Robert Mugabe from power, characterizing his comments as "malicious propaganda."

While some economists said Dell’s forecast is debatable, most agree Harare must take urgent steps to check inflation and stabilize the economy.

For perspective, VOA turned to two economists: Eric Chinje, head of communications at the African Development Bank, and Eddie Cross, an economic advisor to Movement for Democratic Change founding president Morgan Tsvangirai.

Cross told reporter Ndimyake Mwakalyelye that there can be little doubt about the dire condition of the Zimbabwean economy.

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