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By MacDonald Dzirutwe

annual inflation raced to a new record in December, inflicting more pain on workers in a country recently hit by wildcat strikes against an economic crisis stoking political tensions.

Inflation -- the highest in the world -- is the clearest sign of a recession that critics blame on President Robert Mugabe's politically driven economic decisions, resulting in runaway unemployment and shortages of foreign currency to food.

The Central Statistical Office (CSO) said on Wednesday annual inflation raced to 1,281.1 percent in December from 1,098.8 percent the previous month, setting the stage for more price increases for hard-pressed consumers.

On a monthly basis inflation rose to 36.3 percent, up from 30.1 percent the previous month.

"The top three items that contributed most to year-on-year and month-on-month inflation were domestic power: electricity, gas and other fuels," Moffat Nyoni, acting CSO director, told reporters.

Analysts blame inflation for boycotts that have hit the health sector, warning these could trigger wider, spontaneous street protests and fuel political tensions in the country.

Public medical care has ground to a halt as doctors at state hospitals continue with a strike to demand salary hikes of more than 8,000 percent, leaving hospital waiting rooms jammed with patients needing treatment.

"Government thinks it is in full control, but if things grind to a halt we could find ourselves in a different situation altogether ... these small things could trigger the masses into action," Daniel Ndlela, a Harare based economist said.

The government has forecast inflation, which it has branded the country's chief enemy, to retreat to 350-400 percent by the end of this year. But others, including the International Monetary Fund, expect it to accelerate further.

The CSO said average inflation for 2006 measured 1,016.7 percent, up from 237.8 percent in 2005.

Zimbabweans, struggling to cope with spiralling costs, are falling deeper into poverty.

At a city bus station that serves some of Harare's working class township districts, commuters waited for hours for a ride in a few state buses still charging slightly lower fares after increases of 100 percent two weeks ago.

"Things are very tough, so I have to save every dollar where I can," said James Mukore, a cleaner at a nearby office block.

"It is very difficult to keep up with the prices, here and in the shops," he told Reuters in the main vernacular Shona language, his eye out for the "cheap" bus.

In the last two weeks, there have been price rises across the board, including that of rentals, bread, fuel and medicines.

And in shops in the capital Harare, the impact on consumers is clearly evident. Angry or confused shoppers look dazed as they are hit by new price increases almost daily.

The CSO said a family of five now needed to earn 344,256 Zimbabwe dollars a month not to be considered poor, up from Z$228,133 previously. The figure is far higher than the average earnings for most workers of less than Z$50,000.

Mugabe, the country's sole ruler since independence from Britain in 1980, denies mismanaging the economy and charges that it has fallen victim to a Western campaign of sabotage. - Reuters

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