Zimbabwe’s Prices Surge at Fastest Pace Since Hyperinflation

Zimbabwean consumer prices surged at their fastest pace since a hyperinflationary spiral a decade ago, casting a further shadow over the economic reform efforts of President Emmerson Mnangagwa.

Inflation accelerated to 20.9 percent in October, from 5.4 percent in the previous month, the Zimbabwe National Statistics Agency said in a statement emailed Tuesday. The price of food, which contributes a third to the inflation basket, surged 27 percent from a year earlier.

Mnangagwa, who took over when Robert Mugabe was toppled a year ago following almost four decades in power, has pledged to revive the southern African economy, pay off arrears and lure investors. After winning the July vote, he appointed Cambridge University-trained economist Mthuli Ncube as finance minister.

A 2 percent tax Ncube imposed on electronic transactions from Oct. 1 in a bid to raise income to repay billions of dollars in debt and ignite the economy contributed to the surge in inflation as businesses insisted on cash when there isn’t any.

The result, in a country that abandoned its own currency in favor of a basket including the greenback and the rand in 2009 after inflation reached an estimated 500 billion percent, is that electronic dollars trade at a discount to hard cash. The government’s so-called bond notes have also dropped in value and the levy contributed to shortages of fuel and consumer goods. Mnangagwa has said the tax measure would be reconsidered. Source