By Letwin Nyambayo
Renowned US economist Steve Hanke said Zimbabwe’s 2018 cumulative inflation hit 155,8 percent as of October 12.
According to Hanke’s projections, the first country with highest inflation in the world is Venezuela, at 2 500 000 percent, followed by Iran at 273 percent and Zimbabwe at 155,8 percent.
“My weekly world inflation roundup: New to the list is Zimbabwe, which now holds the third highest inflation rate in the world,” Hanke posted on his twitter account.
Hankes’ calculations are derived from the Old Mutual Implied Rate, which indicates that the inflation rate in Zimbabwe rose sharply from 80 percent in early October to 155,8 percent last Friday.
Although government maintains that the official cumulative inflation is at 4,83 percent, economists who spoke to the Daily News said Hanke’s projections were more realistic.
Economist Simbarashe Gwenzi argued that given the rise in the consumer price index, which by definition measures changes in the price levels of consumer goods in the food basket and services purchased by households, Hanke’s projections are possibly true.
Gwenzi said the high inflation was triggered by a cocktail of variables such as consumer perception of the market, producer perceptions, hedging by producers who were index tracking the parallel market rates and a false start to the implementation of the new statutory transactional tax.
“Commodity prices may most likely not keep rising at that rate, the market reaction may be short-lived, provided public perception and injections of foreign currency address the critical needs of providing raw materials for producers whose goods make up the consumer price index,” he said.
Economist Nigel Chanakira said although he has not been tracking the inflation figures, the price spirals being experienced countrywide due to the fluctuations on the currency market put considerable pressure on inflation.
“I am not tracking (inflation) but what I know for a fact is that with groceries and currency rates going up, there can’t be too much denying of Hanke’s inflation projections,” said Chanakira.
He described the hiking of prices as very disturbing, saying nobody wanted to absorb the additional costs arising from the fluid economic situation. Daily News.