Zimbabwe's inflation accelerates

Zimbabwe's inflation accelerates

GONO

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By Staff Reporter

ZIMBABWE'S annual inflation rate accelerated for the first time in almost a year after the country's currency declined against the US dollar, the government said at the weekend.

Year-on-year inflation was 133.6 percent in January, from 132.7 percent in December, the Central Statistical Office said.

Inflation had slowed for the previous 11 months, declining from a record 622 percent in January 2004. Central bank governor Gideon Gono forecasts inflation will be below 10 percent by 2006.

The Zimbabwean dollar declined 30 percent in the 12 months to January as the economy contracted for a sixth year because of drought and President Robert Mugabe's seizure of commercial farms, among them growers of tobacco, the nation's biggest export.

"The easy part of bringing inflation down is now behind us," said Robert Bunyi, an economist at Standard Bank.

"The under-lying inflationary pressures have not been eliminated."

The currency declined to Z$6 047.43 per US dollar at a central bank auction last week. Traders on the parallel market said the currency fell as low as Z$11 500 per US dollar last week.

Zimbabwe's economy shrank by 4.5 percent in 2004, after contracting 8.5 percent in 2003 and 13 percent in 2002.

Gono forecasts that it will expand between 3 percent and 5 percent this year as mining and agriculture recover - Sapa
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