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Zimbabwe inflation hits 175.66%



Zimbabwe inflation hits 175.66%

ZIMSTATS said on a month-on-month basis, the consumer price index rose 39.26 per cent in June compared to 12.54 per cent in May, nearing the monthly 50 per cent figure that would mark the start of hyperinflation.

Prices of basic goods from sugar to cooking oil to building materials soared during the month as much as 200 per cent, the agency added as the local currency fell.

Zimbabwe abandoned its currency after inflation peaking at 500 billion per cent in 2008 wiped out pensions, savings and any vestiges of confidence in the unit.

The high inflation is piling pressure on a population struggling with shortages and stirring memories of economic chaos a decade ago.

The figures cast a shadow over President Emmerson Mnangagwa’s bid to revitalise an economy that suffered decades of decline and bouts of financial chaos under veteran leader Robert Mugabe’s near four-decade rule.

“The economy is in bad shape and conditions continue to worsen,” said Jee-A van der Linde, economist at NKC African Economics.

“There is no doubt that the economy is going to suffer a contraction this year.”

The southern African state has experimented with a few forms of tenders from quasi currency bond notes to electronic iterations, though foreign currencies such as the U.S. dollars and South African rand dominated local transactions.

The new sole tender has tumbled 27.9 per cent since then, lingering at 8.77 against the dollar in official exchanges on Monday.

Exchange rates on the black market showed the pressure even more: the greenback fetched 10.5 Zimbabwe dollars on Monday.

With a vast chunk of economic activity being in the informal sector, many analysts suspect the inflation numbers are significantly understated.

“If things continue to deteriorate like they have, it is probable that prices can snowball into a hyperinflation scenario,” van der Linde said.

The government is under pressure to raise wages for its workers and its offer of an average increase of 97

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