Zimbabwe’s inflation is reported to have dropped to 71.3%, less than half the official rate, at the very time that the government is haggling with business overpricing.
The official inflation for Zimbabwe as of May was 162% but United States economist Steve Hanke says it stood at 71.32% on 3 June.
Hanke, a professor at John Hopkins University, says his annual inflation rates are implied from free-market (black market) exchange rates.
Hanke has been following Zimbabwe’s inflation trends for years and put the country’s inflation at an astronomical 89.7 sextillion percent in 2008. A sextillion has 21 zeroes.
Four years ago, when Zimbabwe said its inflation for August was -0.4%, Hanke said it was in fact 242.72%.
Now the tables have been turned. In April when the government said Zimbabwe’s inflation was 194%, Hanke said it was 159%.
The difference was more drastic the following month. When the government said inflation had dropped to 162%, he said it was 86%. It dropped to 83.38% on 29 May and further to 71.32 on 3 June.
Zimbabwe used presidential powers to enforce pricing using the official foreign currency auction rate rather than the black market and there was an immediate outcry from the industry that this would reverse the economic recovery programme that the government is implementing.
Deputy Finance Minister Clemence Chiduwa, however, said there would be no policy reversal.
He said he could not understand the logic that people who wanted to import wanted Zimbabwe dollars first when they used the United States dollar to import unless this was economic sabotage.
He said that Zimbabwe had introduced the regulations because the black market pricing had the potential of totally destabilising the country’s economy.
Zimbabwe will release its inflation for June in 10 or so days.