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Harare – Zimbabwe’s yearly inflation rate for October rose from 0.78% to 2.24% although analysts doubt the statistics released by the government as the military intervened in the political crisis in President Robert Mugabe’s Zanu-PF party.
Latest data from Zimstats showed the consumer price index (CPI) inflation spiking in October as retailers and businesses pass on the burden of foreign currency shortages to consumers.
The government introduced an additional $300m in bond notes in September.
The World Bank and International Monetary Fund (IMF) have forecast Zimbabwe’s inflation to close the current year at 3% then rising to 9% in 2018. However, analysts are questioning these inflation estimations because of the steep price hikes in Zimbabwe.
“Considering the Old Mutual Implied Rate and the amount that retail prices have increased thus far, the IMF and World Bank’s inflation averages seem to be an underestimation of the current inflation stance.
"The central bank's current inflation levels lack credibility and the future of Zimbabwe’s monetary policy stability remains [after nearly a decade] under scrutiny,” said Chantelle Matthee, an analyst at NKC African Economics.
Other experts say retail outlets in Zimbabwe have increased prices considerably in the past few weeks. The government moved in to stop price increases, although this has not worked effectively.
Zimbabwe, which was on Wednesday plunged into political uncertainty after the military took control of the state broadcaster, ZTV and announced that the army was righting social and economic wrongs being perpetrated by politicians and state officials around Mugabe.
“The potential for civil unrest and widespread confrontation is not off the table. In our previous reports on Zimbabwe, we have highlighted the danger inherent in the constant assault on liberation heroes by [First Lady] Grace Mugabe and her G-40 faction as part of their attempt to control the succession struggle around the ageing president.
“Our prognosis for the short to medium term for the country is not a bedtime story, unless in the Brothers Grimm tradition,” NKC Economics said.
SA President Jacob Zuma said on Wednesday that he had spoken to Mugabe, who was being confined to his home. Reports in Harare indicated that the military was negotiating with the 93-year-old long standing ruler.
“The military may be looking to redress the balance in the political system distorted mainly by the actions of [Grace] Mugabe.
"Our view is that unless directly requested to do so, any Southern African Development Community (SADC) and/or South African intervention would be inviting far bigger trouble,” analysts said.
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