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Extreme Inflation and Price Hikes in Zimbabwe

July 23, 2008

It has been one of those mornings. Have I said this before? We are no longer hunter-gatherers in Zimbabwe – we are foragers.

And this morning we have wasted 2 and a half hours trying to find not only cash – you know that stuff that helps the world turn round, but also which shop has got what in it…

Cash is a dwindling resource here. Because the dollar is crashing so spectacularly, the printing of cash can no longer keep up. It doesn’t help that the Germans are no longer supplying the paper for the notes. But one can’t blame the Germans – apparently they haven’t been paid.

They brought out the new ZW$100 billion note on Monday. Haven’t seen one yet but apparently they are out there.

In January, a 10 million dollar note was issued, then a 50 million dollar note in April. In May, notes for 100 million and 250 million dollars were issued, swiftly followed by those for 5 billion, 25 billion and 50 billion.

The BBC’s comment on this is: “Zimbabwe is to introduce a bank-note worth Z$100bn in response to rampant inflation – but the note will barely cover the cost of a loaf of bread.”

One Zimbabwean told the BBC that the new note would not even cover the cost of his bus fare home from work.

“It’s worthless,” he said.

“Nowadays for my expenses per day, I need about 500 billion. So a hundred billion can’t do anything. Because for me to go home, I need like, 250 billion. So this hundred is worthless.” In fact I talked to Canaan, a shop assistant, and his bus fare, to go to one of Harare’s closest suburbs, has just gone up to 650 billion a day.

… and they are quite correct. A small round roll (smaller than a hamburger roll) has just gone up again to 40 billion… each.  I haven’t seen a loaf of bread in a shop since I arrived – bear in mind that was the 18th June. Perhaps we have always been just too late … but then isn’t that a good indication of the scarcity of  the basic daily requirement?

Official inflation rates are 2.2 million %. Apparently, according to a BBC reporter on world news on Monday the unofficial rate is now running into the hundreds of millions though I think 15 million percent is probably more accurate! Does that make sense? Living here and trying to keep up with the collapse is quite something.

You would think you could reliably base everything on a US dollar rate and therefore always have an idea of what something SHOULD cost. But because the black market on the US dollar rate changes so dramatically, each supplier has his own version of what a US dollar is worth – and even more wierdly, the price in US dollars (which many people quote), also doubles or triples overnight.

This does not make sense. A pie, a week ago, cost US$1.00. The same pie one week later was $2.00. How can the price in US dollars change?

A carton of cigarettes 2 weeks ago was US$5.00. 5 days later the same outlet was asking US$20.00 for the same amount. Around the corner they were asking US$6.00.

You HAVE to be prepared to shop around. But you can only do that if you can find the fuel!

My sister and I hit the shops with a vengeance today. She had 115 trillion in her account which HAD to be spent – it had already spent too long in her bank account. Fresh fruit and vegetables came to 8,653,123,000,000, or in other words, 8 trillion 653 billion 123 million dollars only. In another shop we found a small selection of household cleaning items – that came to over 12 trillion dollars, but to our horror we still had a whole lot of trillions to spend and nothing to spend it on. There was very little actual food,ie: flour, rice, pasta, bread, butter, cooking oil, sugar… I could go on for ever. In fact, today, we didn’t actually find ANY food!

My sister and brother-in-law returned yesterday after several weeks overseas. They are now rather shell-shocked. When they left 6 weeks ago they were getting 1 billion dollars for a US. Today we got 120 billion.

WHAT IF THE CRISIS DRAGS ON?

The prospects of reversing Zimbabwe’s economic meltdown are slim without a change in government. Mugabe refuses to consider reforms and Western powers are unlikely to provide the billions of dollars in development aid needed to bail out the economy.

Zimbabwe’s neighbours could be swamped with an even bigger influx of refugees than the 3 million who already left. Investors keen to invest in Zimbabwe will keep plans on hold.

The European Union has said that only a government led by Tsvangirai can be seen as legitimate.

Western countries are wary of actions that could deepen the suffering of Zimbabweans, caught in the economic collapse of the once prosperous state. They also realize sanctions have done little but embolden Zimbabwe’s elite to hold power.

But to end on a cheerful note – apparently the 100 billion dollar note IS quite valuable – it’s worth US$80 on eBay merely for its novelty value!!!

   
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