We missed this, but on Wednesday the BBC – citing official statistics - reported that prices in Zimbabwe had begun to fall after years of “galloping inflation”:
Prices of goods bought in US dollars, Zimbabwe’s new official currency, fell by up to 3% in January and February.
They were the first official figures since the country’s recent adoption of the US dollar.
Revealing the latest official figures on Tuesday, Central Statistical Office head Moffat Nyoni said the items priced at an average of $100 (£68) in January cost $97 (£66) this month.
So has hyperinflation in Zimbabwe really come to a “shuddering halt”, as the FT put it? Since, as that story notes,
It is the first time, certainly since the mid-1960s, that month-on-month inflation has actually been negative.
Of course, it is also the first time that month-on-month inflation has been calculated using US dollars. And dollarisation has led to a fresh batch of problems (emphasis ours):
Prime Minister Morgan Tsvangirai’s new inclusive government is struggling to come to terms with strident wage demands from teachers threatening to take strike action from May 1 and his own power base, the Zimbabwe Congress of Trade Unions, of which he was once secretary-general. It is demanding a national minimum wage of US$454 a month.
Civil servants are being paid a flat rate “top up” of US$100 a month, regardless of seniority. These payments are made by way of vouchers issued by the central bank, but there have been reports of banks being unable to cash the vouchers because they do not have the necessary foreign currency.
Still, fingers crossed that the new regime will continue its new-found fiscal discipline – for the benefit of the majority, this time around.
Related links:
Using gold as money in Zimbabwe – Option ARMageddon
“Filling the system full of money is insufficient to threaten a rise in inflation” – FT Alphaville
The Bank of England speaks: “This is not Zimbabwe” – FT Alphaville