June 2010 Vol 15, Business , Financial and Property Indaba
Zimbabwe's inflation rate surges
Harare - Rising food prices drove inflation in Zimbabwe up to 6.1 percent in May, the national statistics office said on Tuesday, amid concerns about the country's efforts to climb out of economic collapse.
Harare - Rising food prices drove inflation in Zimbabwe up to 6.1 percent in May, the national statistics office said on Tuesday, amid concerns about the country's efforts to climb out of economic collapse.
Food prices often rise at this time of year, which has become known as the "lean season" in Zimbabwe, when food from the last harvest has run out and the new crops are just coming in.
Aid agencies say at least 11 percent of the maize crop has failed, and the Red Cross expects more than two million people to need food aid.
Under Zimbabwe's unity government, astronomical hyperinflation has ended with the adoption of the US dollar as the currency of reference, allowing the economy to stabilise.
Relaxed import rules also make it easier to buy food from overseas, but also expose Zimbabwe to economic forces outside its control.
"We import most of our things from South Africa and this has a bearing on our inflation," said Blessing Sakupwanya, a senior economist with Merchant Bank of Central Africa, who predicted inflation would keep rising.
"The second issue is that the rand has been firming against major currencies this also has a bearing on our inflation," he said.
"Increases in wages from both the private sector and government have also contributed to the increase."
On Monday, the International Monetary Fund urged Zimbabwe to step up efforts to contain risks in the banking system and to improve the business climate, in particular with respect to property rights.
"Against the background of a recent pickup in inflation and rising concerns about competitiveness, wage restraint is needed in both the private and public sectors," the IMF said in a statement after a mission to Zimbabwe.
