Zimbabwe's inflation rate, which is the highest in the world, climbed to a record 3713,9% last month as food and energy costs rose, the Central Statistical Office (CSO) said yesterday.

The CSO said yesterday that consumer prices jumped to this year-on-year level from 2200,2% in March. Month-on-month inflation increased to 100,7% last month from 50,5% in March.

"This is a classic case of hyperinflation, and it shows we are going downhill. There is no visible sign that the government has the capacity to end this crisis," consultant economist John Robertson said yesterday.

Economists define hyper- inflation as a rapid, out of control rise in inflation at a double-digit month-on-month rate, or in extreme cases daily. It renders a country's currency virtually worthless. Zimbabwe's monthly inflation was until the latest figures marginally above 50%.

Zimbabwe has now joined global case studies on hyper- inflation such as Argentina, where inflation peaked at 4923% in 1989, and Brazil which got to 2477% in 1993.
Yesterday's news of stratospheric inflation figures came out as Zimbabwean central bank governor Gideon Gono suggested large-scale printing of money would continue despite the associated inflationary pressure and stern International Monetary Fund (IMF) warnings.

The IMF said recently this would push inflation towards 6000% by year end.
However, Gono said that he would continue printing money as he was operating under unique and difficult circumstances. According to "Business Day", out of Johannesburg, Gono told MPs that central bank interventionist policy measures, which the IMF and many economists see as unorthodox, would go ahead as the state needed money to fund expenditure.

"We offer no apology, we offer no remorse for our intervention in all spheres of the economy, when we do the unorthodox," Gono said. "We have to do the unorthodox, to go into those areas which traditional economics written before the Second World War see as unorthodox."

What it means to "real" people living in Zimbabwe is illustrated by this news story out of Harare, the capital of Zimbabwe:

Cosmas Maphosa, a male nurse, went to a school uniform shop in the Zimbabwean capital, Harare, to buy a winter cardigan for his daughter, but returned home empty-handed because the price had doubled since when he had decided to buy it three days ago.

Determined that his daughter should not feel the winter chill, Maphosa borrowed some money from a friend and returned to the shop the following day, but again did not have enough money because the price had doubled from the previous day.


Maphosa takes home a monthly salary of Z$200,000 (US$5 at the parallel market rate of US$1 to Z$40,000), so the Z$800,000 (US$20) cardigan was well out of his price range; his daughter will just have to spend the winter without any warm school clothing.

I made friends in Zambia who went back and forth between Zimbabwe and Zambia. They could not afford to buy any of the sundries we find so necessary - deodorant, toothpaste, etc, on the Zimbabwean side, so they stocked up everytime they came to Lusaka. They also can not afford fresh produce in "Zim", so crave it by the time they make it back to Lusaka. Even when I tried to cross into Zimbabwe out by Victoria Falls, I was told that I had to pay for the entry visa in US dollars. The reason? "We don't trust our own money", said the border guard. US credit card companies will not pay for charges made in Zimbabwe. If they did, they would be charged the "official" rate of $1 for $250 Zim dollars, instead of the now-going rate of $1 USD to $40,000 Zim dollars. It's completely out of control.

So far, the worst case of hyper-inflation occurred in the former Yugoslavia. Between October 1, 1993 and January 24, 1995 prices increased by 5 quadrillion percent. This number is a 5 with 15 zeroes after it. The social structure began to collapse. Thieves robbed hospitals and clinics of scarce pharmaceuticals and then sold them in front of the same places they robbed. The railway workers went on strike and closed down Yugoslavia's rail system.


The government set the level of pensions. The pensions were to be paid at the post office but the government did not give the post offices enough funds to pay these pensions. The pensioners lined up in long lines outside the post office. When the post office ran out of state funds to pay the pensions the employees would pay the next pensioner in line whatever money they received when someone came in to mail a letter or package. With inflation being what it was, the value of the pension would decrease drastically if the pensioners went home and came back the next day. So they waited in line knowing that the value of their pension payment was decreasing with each minute they had to wait.

The telephone bills for the government operated phone system were collected by the postmen. People postponed paying these bills as much as possible and inflation reduced their real value to next to nothing. One postman found that after trying to collect on 780 phone bills he got nothing so the next day he stayed home and paid all of the phone bills himself for the equivalent of a few American pennies.

Here is another illustration of the irrationality of the government's policies: James Lyon, a journalist, made twenty hours of international telephone calls from Belgrade in December of 1993. The bill for these calls was 1000 new new dinars and it arrived on January 11th. At the exchange rate for January 11th of 1 DM = 150,000 dinars it would have cost less than one German pfennig to pay the bill. But the bill was not due until January 17th and by that time the exchange rate reached 1 DM = 30 million dinars. Yet the free market value of those twenty hours of international telephone calls was about $5,000. So despite being strapped for hard currency, the government gave James Lyon $5,000 worth of phone calls essentially for nothing.

There is no question Zimbabwe's economy is headed for total collapse. I guess my question is "What then?" Time will tell, but I'm thinkin' it won't be pretty.