BY PRIVELEDGE GUMBODETE ZIMBABWE’s inflation rate at 191,7% as of June 23 is now much higher than Ukraine’s 41%, a country in the middle of a fierce war with Russia.
In a statement, the Zimbabwe Coalition on Debt and Development (Zimcodd) said this was an indication of failure by the Finance ministry and the Reserve Bank of Zimbabwe to rein in inflation.
“Official statistics show that inflation is now at 192% whereas (Amedican economist) Steve Hanke’s estimates are at 377% – positioning Zimbabwe at the pole (position) of global inflation, way ahead of 41% for war-torn Ukraine. The monetary authorities seem to have failed to tame the galloping inflation as the monetary policy measures being gazetted are futile,” the Zimcodd said in a statement.
Economists now believe that lack of confidence in the Zimdollar is the major driver of inflation.
“The war emerged when we were already in our own crisis. As largely agreed, the turbulence on the exchange rate derives from the manner foreign currency is being managed through a deficient auction system now complemented by a WBWS mechanism, against a runaway parallel market on which actual prices are pegged,” economist and academic Godfrey Kanyenze said.
“As Gresham’s Law would predict, if a country has two currencies operating simultaneously, good money will simply disappear from the market,” he added.
Economist Vince Musewe said: “Remember, we import what we consume so as prices of fuel and other imports shoot up, it affects us. However, you have to add to that our psychology as a nation where we trust the US dollar more than local currency and this continues to fuel inflation.”
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