Friday, May 23, 2008

Zimbabwean acceleration 

The AP reports (h/t: Best of the Web) that inflation is now over one million percent over the last year in Zimbabwe. I think you need to consider it much worse than that. The Zimbabwe Independent last week reported on monthly rates: 355,000% in March, versus 165,000% in February:

Top government sources said the inflation figures for March had initially been projected at 406 000%, but were still being computed as the Central Statistical Office (CSO) continues to fiddle with the consumer basket.

"The CSO were instructed last month to change the consumer basket. The basket is forever changing." said one Ministry of Finance official. "It remains uncertain whether the go ahead will be given to them to release the figures."

Food and non-alcoholic beverages continued to be the major drivers of inflation in March.


The figures come at a time the RBZ has introduced higher denomination bearer cheques notes to counter the adverse effects of inflation.

The central bank introduced the $500 million bearer cheques for the public and the $5 billion, $25 billion, $50 billion agro-cheques for farmers. The new notes come hardly two weeks after the introduction of the $250 million bearer cheques.

"Counter the adverse effects", you say? Seems to me you're only making it worse.

So what really is the rate? In the legendary hyperinflations (1923 Germany, 1941-44 Greece, 1946 Hungary or 1993 Yugoslavia) you had prices doubling within a day, or at least every two days. The Independent article reports an economist saying Zimbabwe prices are doubling weekly. That Zimbabwean $500 million note was worth $2 US when first introduced last week, probably only $1 now. These things tend to accelerate quite rapidly however, and with elections still a month away, the record hyperinflation of Hungary is in sight.