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Published on August 27, 2007

Zimbabwe holds the world record for inflation. No, we are not talking double digits. Hold your breath. Chances are Zimbabwe will see 10,000-per-cent inflation by the end of the year.

Huge hikes in the southern African country's prices for bread, electricity and meat drove year-on-year inflation to more than 7,000 per cent as of the middle of this year, and recent prospects look bleak as prices continue to skyrocket.

The Associated Press reports that Zimbabwe has seen runaway inflation since President Robert Mugabe began five years ago seizing thousands of white-owned commercial farms for redistribution to blacks. Agricultural production, once Zimbabwe's economic backbone, has dropped substantially, and foreign investors have fled as dozens of companies have been forced to close. Unemployment and prices have risen, and the local currency has plummeted against the US dollar.

The government claims to see signs that the runaway inflation is being reined in since the imposition of wide-ranging price cuts, despite the annual rate hitting a new high of more than 7,500 per cent. Figures released by the Central Statistical Office (CSO) show the annual rate, which was already the highest in the world, rising once again last month to 7,634.8 per cent.

"The year-on-year inflation rate for the month of July 2007, as measured by the all-items consumer price index, stood at 7,634.8 per cent, gaining 383.7 percentage points on the June rate of 7,251.1 per cent," a CSO statement said.

Mind you, it did say month-on-month inflation in July was 31.6 per cent, down 54.6 percentage points on the June rate of 86.2 per cent.

It was the first time since May, when the figure stood at 3,714 per cent, that the authorities had released the inflation rate, and the announcement was greeted with relief by Finance Minister Samuel Mumbengegwi.

Zimbabweans on the street, however, do not share his sunny optimism. Some say that correcting for the price cuts the actual inflation rate may be higher than the government reckons.

Stay tuned to see what happens to Zimbabwean prices by year end. Cross those fingers.

Busdsk@nationgroup.com