Zimbabwe inflation surges by 90 percent

Zimbabwe inflation surges by 90 percent

• Murerwa slashes ministerial budgets

• Top businessman Naran dies

• SA approves US$1bn credit line for Zim

• RBZ devalues Zim dollar by 40 percent

• Zimbabwe faces economic meltdown

• Gono's economic plan crumbles as inflation shoots up

• Patrick Mlambo: A 100 reasons why Gono should resign

• Gono wants white farmers back

• Central back chief admits failure

• Gono revises inflation target 100 percent upwards

• Gono's 'sleepless nights' over inflation

• Gono fighting a losing battle

• Gono, the Zimbabwean Napoleon

• Patrick Mlambo: The small minds in charge of our economy

• Chido Makunike: Overcoming the 'Messiah Complex'

• Zimbabwe dollar depreciates by 4 percent

• Inflation accelerates once again

• Gono predicts inflation to fall to 20%

• Zim fools no-one with 9% unemployment claim

• Zim claims on lowered inflation unconvincing

• House prices bite Zimbabwe's poor

• Reserve Bannk cautions against paying ex-political prisoners

• $200bln windfall for ex-political prisoners

• Zimbabwe's inflation seen dipping to 160%

By Stella Mapenzauswa

ZIMBABWE'S inflation rate surged to almost 255 percent in July, data showed on Wednesday, further dimming President Robert Mugabe's prospects of an economic turnaround after six years of recession and political turmoil.

Inflation has retreated from a record peak of 623 percent in January 2004, but remains among the highest in the world as Zimbabweans struggle with rapidly rising prices and a collapsing local currency.

Simple consumer items have soared in price. Bread costs 10,000 Zimbabwe dollars a loaf against 21 dollars five years ago. Shoppers need to carry huge bundles of Zimbabwe dollars, whose value has plummeted to 18,500 to the U.S. dollar from 55 in 2000.

On the black market the exchange rate is about 40,000/dollar. Hyperinflation is one of several problems facing the country, which is reeling from its worst economic crisis since independence from Britain in 1980.

The annual inflation rate jumped to 254.8 percent in July from 164.3 percent in June, mostly due to rising food prices and rent costs, the Central Statistics Office said.

Analysts said the latest data would pressure the government to find a way to persuade the West to resume donor aid, which was withdrawn largely over Harare's seizure of white-owned farms for blacks and charges that it had rigged elections since 2000.

"The situation is getting out of hand and we need to restore confidence in the country so that foreign investors and donors can return," independent economist James Jowa said.

"The inflation figure makes it that much more obvious that there is need for a political solution to Zimbabwe's problems."

Mugabe has rejected regional attempts to foster dialogue between his ruling ZANU-PF and the main opposition Movement for Democratic Change (MDC) to help resolve the crisis. He says there is no point in talking to a party he sees as a puppet of the former colonial power Britain.

The MDC says 81-year-old Mugabe, in power since 1980, is burying his head in the sand amid an economic crisis widely blamed on his mismanagement. Dissatisfaction among urban consumers is seen as the key for extended support for the MDC.

The economy has contracted by more than 30 percent in the last six years and on Tuesday Finance Minister Herbert Murerwa lowered growth forecasts for 2005 further to below 2 percent from earlier estimates of 3.5 percent.

Zimbabwe is also grappling with an acute shortage of foreign currency. This is forcing manufacturers to operate well below capacity and leading to a scarcity of basic commodities. Unemployment exceeds 70 percent of the workforce.

Last month the central bank said inflation was set to climb until September before gradually subsiding to end the year at an annual rate of 80 percent, but private economics are sceptical about a retreat.

Prices jumped at a monthly rate of 47 percent in July after 18.1 percent in June. Inflationary pressures are seen fanned by the government's plans to spend more money this year than previously budgeted on drought relief and food imports.

Mugabe has denied charges that he has run down one of Africa's most promising economies through a series of unsound policies, including the land seizures which critics say have disrupted agricultural activity, compounding the impact of drought.

The former breadbasket of the region has suffered severe food shortages since 2000. The World Food Programme estimates about 4.3 million people may face hunger in coming months - Reuters
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