Zimbabwe inflation soars to 231 million percent

HARARE, October 9, 2008 (AFP) – Zimbabwe’s annual inflation rate soared to 231 million percent in July, a state newspaper said Thursday, confirming the daily hardships of a nation driven into poverty and trapped in a political impasse. Staggering increases in the price of bread and cereals were the main reason for the jump from the June rate of 11.2 million percent, the Herald said, citing the Central Statistical Office.

Shortages of wheat are driving up bread prices, the paper said, compounding the struggle to avoid hunger in a country where the United Nations estimates more than five million people — nearly half the population — will need food aid.

On a monthly basis, the paper said prices skyrocketed by 2,600.2 percentage points in July, compared to 839.3 percent the month before.

Harare-based economist Best Doroh said the actual inflation figure could be much higher, as a shortage of foreign currency has caused the value of the local unit to plummet daily.

“The root cause is exchange rates which are shifting rapidly as the local dollar loses value,” Doroh told AFP.

“Foreign currency is scarce. There is not much inflow as industry is not producing. If nothing is done to address the root cause of fo