Weary Zimbabweans are facing a new wave of massive price increases that put many basic goods out of their reach.

Independent finance houses said in an assessment Tuesday that annual inflation rose this month to 1,063,572 percent based on prices of a basket of basic foodstuffs. As stores opened for business Wednesday, a small pack of locally produced coffee beans cost just short of 1 billion Zimbabwe dollars. A decade ago, that sum would have bought 60 new cars.

A loaf of bread cost 200 million Zimbabwe dollars - enough for 12 new cars a decade ago. Fresh price rises were expected after the state Grain Marketing Board announced up to 25-fold increases in its prices to commercial millers for wheat and the corn meal staple.

The collapsing economy was a major concern of voters who dealt longtime President Robert Mugabe a defeat in March 29 elections. His challenger, Morgan Tsvangirai, topped the poll but did not win the simple majority needed to avoid a runoff. The two face each other in a second round June 27.

Mugabe was to officially launch his runoff campaign with a rally at his party’s headquarters in Harare Sunday, the state-run Herald newspaper reported Wednesday.

The opposition’s campaigning has been hampered by violence blamed on Mugabe’s government and party. The opposition claims Tsvangirai is the target of a government assassination plot and he has been out of Zimbabwe since shortly after the March 29 first round. He plans to return to Zimbabwe to campaign for the runoff once security measures are in place, his aides have said.

Mugabe, speaking as he reviewed graduating police cadets Wednesday, characterized the opposition as a tool of former colonial ruler Britain, a familiar campaign theme from him. He also accused the opposition of fanning violence. Independent observers have said that while there have been some retaliatory attacks by the opposition, the vast majority of the attacks have been carried out by Mugabe supporters.

The opposition, “formed at the behest of Britaon in 1999, is now on an evil crusade of dividing our people on political lines,” Mugabe said.

The economy was on shop clerk Jessica Rukuni’s mind as she left the public swimming pool in downtown Harare’s central park with three disappointed children. She found the new admission price of 100 million Zimbabwe dollars - 30 US cents or 19 euro cents - out of reach.

“The point is that it’s far too much for most people who don’t get US dollars,” she said.

The divorcee’s income is the equivalent of about one US dollar a day. Her family has one basic meal a day.

One kilogram (2 pounds) of chicken more than doubled to 1 billion local dollars Tuesday and rental for a two-bedroom apartment rose from this month’s end to 22 billion Zimbabwe dollars - eight times the May price.

The state Rent Board, where unfair or inflated rental hikes are reported, has had no working telephones for several months, a telephone operator at the Ministry of Housing said.

In the economic meltdown, manufacturing industries, running at below 30 percent of their capacity, reported growing absenteeism by workers facing soaring commuter bus fares.

Economic analysts say unless the rate of inflation is slowed, annual inflation will likely reach about 5 million percent by October.

Zimbabwe’s official annual inflation was given by the government as 165,000 percent in February, already by far the highest in the world. The government has not updated that - the state statistical service has said there were not enough goods in the shortages-stricken shops to calculate new figures.

“The crunch is going to come when local money is eroded to the point it is no longer acceptable” in commercial activities or as earnings, especially by longtime ruler Mugabe’s loyalists, said independent Harare economist John Robertson.

Already, more transactions are being done in US dollars, both openly and in secret.

Robertson said sectors of the economy - phone services, the supply chain, maintenance of equipment or manufacturing - may collapse one at a time, but a country continues to exist even in chaos or anarchy.

“In the end, a country must fall into line with international financial standards to balance its books” as experience in once-inflationary Latin American countries has shown, he said.

He said that meant re-engaging with international financial institutions, lenders, donors and investors traditionally dominated globally by Western countries, the main source of hard currency.

Mugabe accuses the United States, the European Union and especially former colonial ruler Britain of using their economic influence to back his opponents and bring about his ouster.

He has severed ties with the International Monetary Fund, the World Bank and other financial organizations. But Mugabe’s “Look East” policy to attract trade and investment from China and Asia has yielded a fraction of what is needed to halt inflation.

In the fastest shrinking economy outside a conventional war zone, much of the nation’s crucial savings have been used up in government borrowing and spending without corresponding productive income.

“It is as though a starving man has eaten his left foot and starts eating his right foot to survive in the short term,” Robertson said.

Zimbabwe’s economic decline has been blamed on the collapse of the key agriculture sector following the seizures, often violent and at Mugabe’s orders, of farmland from whites. Mugabe claimed the seizures begun in 2002 were to benefit poor blacks, but many of the farms went to his loyalists.

(Source)