With the current economic outlook and rapid changes in prices of basic commodities, Zimbabwe is fast approaching the historical 2008 hyperinflation period. The June official inflation is now at 175%, the highest since dollarisation.
In its latest report, Zimstat reported the figures as follows:
- Monthly inflation 39.26%
- Food Basket Inflation 251.94%
- Food Basket Inflation Month on month 55.07%
Consumer Price index– July 2018-June 2019
In 2008, Zimbabwe had the second highest incidence of hyperinflation on record with estimated inflation rate for Nov 2008 at 79,600,000,000%. This translate to a daily inflation rate of 98%. Prices would double on a daily basis.
The hyperinflation was caused by excessive printing of money in response to a series of economic shocks. Zimbabwe had the worst of both worlds – prices rising faster than wages and incomes. People became “poverty billionaires’ It was no good having a salary of One billion dollars if a loaf of bread cost two billion
With the introduction of the local RTGS/bond as the sole trading currency a confluence of adverse factors threaten full policy efficacy – for instance; monetary tightening proposals to strengthen the ZWL are countered by the inherent threat of recession which ordinarily prescribes policy loosening. A strict monetary monetary discipline is critical in sustaining the local currency.
2008 Inflation figures
To have a full understanding of a 2008 repeating in 2019 below are the causes of the 2008 hyperinflation in Zimbabwe.
During the 1998 to 2008 Government started printing money in response to:
- High national debt
- Decline in economic output.
- Decline in export earnings.
- Price controls which exacerbate shortages.
- Lack of confidence in government, economy and political life.
- Expectations of hyperinflation
All the above mentioned factors are still in existence with the greatest factor now being lack of confidence in in government and political life. Much has been said about political reforms in Zimbabwe by the opposition and even the external world like the US but unfortunately nothing has been done.
To stop another 2008 recurrence, Zimbabweans need to unite and save the nation from the current situation. Zimbabweans have a history of finding common grounds like the 2009 GNU by the Former President RG Mugabe and the late former Prime Minister Morgan Tsvangirai.