Zimbabwe's inflation races to 1 730 percent

• Zimbabwe posts budget deficit of $47,9 billion

• RBZ rolls out $5 000 and $50 000 notes

• Letter from United States ambassador

• Zimbabwe's inflation hits 1 593%

• 2006 Year End Monetary Policy Statement

• Mutambara: the end of thing by Mugabe regime

• RBZ lifts restrictions on foreign currency transfers

• Biti: failure is the only option

• Gono: 'devaluation will bless parallel market'

• RBZ cuts money supply to stem inflation

• Interest rates unchanged at 500%

• RBZ refuses to devalue currency

• Zim inflation hits new record

By MacDonald Dzirutwe

ZIMBABWE'S inflation hit a new record on Friday and analysts say it is a pointer that President Robert Mugabe's government is fast losing the battle to turn around a crumbling economy threatening its rule.

The southern African nation is in the throes of a deepening economic crisis dramatised by the spiralling cost of living and a government crackdown on political opponents.

Critics say Mugabe's controversial and politically-motivated policies have driven one of Africa's most promising economies into the ground. Zimbabwe now suffers acute shortages of foreign currency, food and fuel, and has unemployment above 80 percent.

The Central Statistical Office (CSO) on Friday said Zimbabwe's annual inflation rate -- which was already the highest in the world -- surged to 1,729.9 percent in February from 1,593.6 percent the previous month.

On a monthly basis however, inflation slowed to 37.8 percent from January's 45.4 percent.

The inflation rate is a key indicator of the economic crisis, which many say has been worsened by Mugabe's seizures of white-owned commercial farms to resettle blacks, resulting in a massive fall in production in the vital agriculture sector.

The government has branded inflation its chief enemy.

"Inflation is proving to be the number one enemy for the government but in a more deeper political sense," said Eldred Masunungure, chairman of the University of Zimbabwe's political science department.

"Zimbabweans are now searching for the cause of their misery and I believe sooner they will be on a collision cause with the government and I am sure the authorities know that. The clouds are gathering on the horizon," Masunungure added.

The year started with wildcat strikes by doctors, nurses, teachers and university lecturers pushing for higher pay. The government last month increased their salaries, in what analysts said was out of fear that the job boycotts could widen and turn into street protests.

The analysts said price pressures still lurked as the Zimbabwe dollar continued to depreciate on a thriving black market while rising wage demands by workers and worries over another failed summer crop would see prices rising further.

The CSO said the inflation rate had been mainly pushed by increases in food prices and the cost of electricity and fuel.

"The inflation outlook is dire and given the price pressures we will see the inflation rate continuing to rise. This calls for an urgent implementation of a social contract to freeze wages and prices," David Mupamhadze, chief economist at ZABG Bank said.

The government has projected inflation will ease to between 350-400 percent by the end of this year but analysts predict it will climb higher.

The International Monetary Fund sees the figure hitting 4,000 percent. - Reuters

JOIN THE DEBATE ON THIS ARTICLE ON THE NEWZIMBABWE.COM FORUMS
newsdesk@newzimbabwe.com