Zimbabwe inflation tops 1000 per cent

HARARE - Zimbabwe's annual inflation rose above 1,000 per cent in April, dramatising the severity of an economic crisis which analysts say could trigger protests against President Robert Mugabe's government.

Zimbabwe, in its eighth year of recession, has the fastest shrinking economy of a country outside a war zone, according to the World Bank, and the highest inflation rate in the world.

The official statistics agency said on Friday the annual inflation rate hit a record 1042.9 per cent in April after rising 913.6 per cent in March.

"As expected, it's more doom and gloom..." said private economic consultant John Robertson.

"How do you start to explain a situation where you wake up to a new price almost every day? Many families are barely getting by; they are in a survival mode," he said.

Analysts say Mugabe has dented Zimbabwe's investment image with his seizure of white-owned commercial farms for blacks, and that government plans to acquire a 51 per cent stake in all foreign-owned mines will keep external funding at bay.

That has undermined the currency, fuelling an inflationary spiral which shows no sign of abating. Economists say the inflation rate could end the year at around 1800 per cent.

Some shops no longer put prices on commodities, saving themselves the trouble of changing them every day. With a carton of orange juice costing 500,000 Zimbabwe dollars (about $8) and a kilo of beef up to a million dollars, people carry their money in large bags even for simple shopping trips.

Analysts say most Zimbabweans are just surviving, after cutting down on many basic necessities, with some families living on a single meal a day.

"There is a lot of anger over the economic hardships, and if you combine this with the political conditions, we have an explosive social environment," said Eldred Masunungure, from the political science department at the University of Zimbabwe.

"We are right on the edge, and politically what is going to be interesting is how both the government and the opposition are going to play the game."

The main opposition Movement for Democratic Change (MDC) says it is organising peaceful anti-government marches to protest Mugabe's political and economic policies.

Mugabe has warned MDC Leader Morgan Tsvangirai that he would be "dicing with death" if he tried to force him out of power.

Mugabe, 82, in power since independence from Britain in 1980, has used tough security laws to curb protests and says the economy is a victim of sabotage by opponents of his seizures and redistribution of white-owned commercial farms to blacks.

Critics blame the land reform programme for a 60 per cent drop in agricultural output since 2000, leading to a 35 per cent fall in gross domestic product.

In the first major violent protests over a sharp rise in college fees, police said students burned down a computer laboratory and classroom block at Bindura University in northeast Zimbabwe.

Mugabe put his security services on high alert early this year over fears that bitter wage disputes, school and consumer price hikes amid the deepening economic crisis might spark street demonstrations.

And in a measure clearly aimed at forestalling protests against his ruling ZANU-PF party, Mugabe recently awarded civil servants, including security forces, a 300 per cent wage rise.

On Friday the government increased salaries for traditional chiefs by 600 per cent - almost in line with its pledge that it would print money if necessary to overcome its current problems.

Many urban Zimbabweans have so far survived through wheeling and dealing and through subsidies from relatives abroad who send money for groceries, political and economic analysts say.

Zimbabwe's inflation is far from being the worst in recent history. Argentina struggled with inflation at around 5,000 per cent a year in the 1980s.

The most notorious hyperinflation was in Germany's Weimar Republic in the 1920s when the currency had such little value that one US dollar was equal to 80 billion marks.

- REUTERS