Inflation in Zimbabwe: 165,000% or 4M% or 30M%?

♠ Posted by Emmanuel in at 7/02/2008 04:37:00 AM
It is perhaps ironic that the German government has told one of its firms to stop providing paper for Zimbabwe's central bank (or whatever passes for one there) to print its currency of infinitesimally meagre value. Interwar Germany has long been famed for its degeneracy: In the economic realm, currency was printed at an astonishing pace to pay off onerous war reparations, resulting in a bout of hyperinflation. In the social realm, the generally miserable conditions made licentious conduct normal in pursuit of cash. Life is a Cabaret, old chum, and all that. However bad inflation was in Weimar-era Germany, Zimbabwe with a global pariah in Robert Mugabe is giving it a run for its money--literally. Indeed, anti-globalization types should surely take note of the generally high levels of economic insulation achieved by Zimbabwe. So if worldwide economic integration is vile, head for North Korea, or better yet, Zimbabwe to enjoy the fruits of splendid economic isolation. As far as I can tell, though, far more people seem to be fleeing these godforsaken places than those wishing to enter. There must be a lesson in here somewhere.

Something that puzzles me though is the inflation rate in Zimbabwe under the economic stewardship of one Robert Mugabe. The Associated Press report below confuses me as it is rather sloppily written. It first says that the inflation rate in February reached 165,000% according to government sources (compiling statistics for Zimbabwe's government strikes me as a fascinating occupation.) However, it then goes on to say that the real rate of inflation is more like 4,000,000% according to a more impartial source. Not only is change in the level of inflation confused with the level of inflation, but the periods compared may also different--i.e., monthly versus annualized:

A German company that has been supplying paper used by Zimbabwe's central bank to print bank notes said Tuesday it is stopping shipments immediately at the request of Germany's government.

The move could be a new problem for the regime of President Robert Mugabe, which has been churning out currency amid skyrocketing inflation that forces Zimbabweans to shop with bundles of cash. A pint of milk can cost 3 billion Zimbabwe dollars, or about 30 U.S. cents.

Giesecke & Devrient GmbH of Munich said it would stop delivering bank note paper to the Reserve Bank of Zimbabwe "with immediate effect." It said the decision came in response to an official request from the German government and calls for international sanctions by the European Union and United Nations.

"Our decision is a reaction to the political tension in Zimbabwe, which is mounting significantly rather than easing as expected, and takes account of the critical evaluation by the international community, German government and general public," chief executive Karsten Ottenberg said in a statement.

Zimbabwe's currency needs have spiraled upward as a shattered economy spurs overheated inflation. Prices rose 165,000 percent in February, according to government figures, but independent experts say the real inflation rate is closer to 4 million percent.

Mugabe, who was sworn in as president for a sixth term Sunday after a widely discredited runoff election, was once hailed for leading Zimbabwe's independence fight. But he has grown increasingly unpopular for land seizures and other economic policies that wrecked the country's once-vibrant agriculture sector.

Newsweek further adds to the confusion by noting that the level of inflation was 165,000% in February, and that Harare's Financial Gazette recently said the inflation rate hit an even more astounding 30,000,000%:
As Mugabe squeezed, Zimbabwe's already desperate economic crisis worsened. Inflation, which topped 165,000 percent in February (according to Reuters)—already the highest in the world—recently hit a mind-boggling 30 million percent, according to Harare's Financial Gazette. Bread sells on the black market for 3.5 billion Zimbabwean dollars a loaf. As the U.S. ambassador in Harare, James McGee, put it, "Mugabe turned Zimbabwe from the breadbasket of southern Africa into its basket case."
Confusing, no? One thing's for sure--things cannot stay like this for long in Zimbabwe. When Mugabe goes, he's going like Elsie...[pardon the Cabaret overdose]