By Leopold Munhende
ZIMBABWE’s crippling three digit inflation rate will continue right into the middle of next year, top economist Professor Tony Hawkins has said, in a report to local Industrial Psychology Consultants (IPC).
Hawkins said rising inflation rates will devalue wages to a quarter of their lowest levels since 2008.
“The next three months promise to be very difficult economically. The inflation rate in Zimbabwe averaged 10.8% from 2009 until 2019 reaching an all-time high of 288.5% in August 2019.
“The annual rate will stay in three digits well into the second quarter of 2020,” said Hawkins.
According to economist and currency trader, Professor Steve Hanke, Zimbabwe’s inflation now stands at 591% despite Finance Minister Mthuli Ncube’s claims that it has maintained a lowly 20%.
Ncube recently announced inflation will fall to 10% by December this year.
Added Hawkins, “In 2018, a total of 855 000 people had formal sector jobs outside agriculture, earning an average annual wage of ZWL$7,500. However, with prices rising 170% on average, real wages will fall by almost a quarter to their lowest level since 2008.
“Such a drastic fall in real earnings is bound to have an impact on labour market conditions.”
Hawkins predicted the Zimbabwean economy to contract by about 13% before recording minimal growth after 2021.
The Consumer Council of Zimbabwe (CCZ), which tracks the country’s monthly food basket, this week announced a rise in the cost of living from RTGS$1 942 to RTGS$3 748 against civil servants’ salaries of less than RTGS$1 000, (below US$100).
Ncube’s decision to float the RTGS$ against foreign currencies has resulted in a steep hike of prices of basic goods and a worsening economic condition reminiscent of the 2008 era.