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Rate of inflation dips in Zimbabwe

Prices in Zimbabwe have started to fall after years of devastating inflation that left the national currency nearly worthless, a rare piece of good news for an economy that remains a shambles.

world Updated: Mar 25, 2009 13:17 IST

Prices in Zimbabwe have started to fall after years of devastating inflation that left the national currency nearly worthless, a rare piece of good news for an economy that remains a shambles.

Prices of goods bought in US dollars, Zimbabwe's new official currency, declined by 3 percent since January, the state statistical office said on Tuesday.

The figures were announced as Zimbabwean prime minister Morgan Tsvangirai returned home after a week in neighboring South Africa, where he spent time with his children following his wife's death in a road crash. He said he was ready to get back to work.

Until the Zimbabwe dollar became virtually obsolete in recent weeks, Zimbabwe's last official inflation rate in the local currency was given as 231 million percent in August, by far the highest in the world.

Moffat Nyoni, head of the Central Statistical Office, said items priced at an average of $100 (euro73) in January cost $97 (euro71) this month.

No official annual US dollar inflation figure was calculated, Nyoni told reporters. And the situation is complex, because dollars are not readily available. But some Zimbabweans get money from relatives or friends working abroad, and the government recently began paying civil servants in dollar vouchers.

The switch to the American currency in recent months saw fluctuations in prices slowly decline though as imported goods, mainly from South Africa, became more widely available. But chronic shortages of hard currency, food, gasoline and most basic goods have continued alongside the collapse of water, power and public health utilities. Zimbabwe industries have reported a decline in production of up to 90 percent.

In several years of political and economic turmoil, an estimated 4 million Zimbabweans, a quarter of the population, have fled to neighboring South Africa and to Australia, Europe and the United States.

The money they send to families at home is cited as the biggest source of hard currency. About 7 million Zimbabweans, most without access to hard currency, are receiving food handouts from foreign donors and charities in the former regional breadbasket.

Tsvangirai was sworn in as prime minister last month under a unity government deal meant to end nearly a year of political impasse. The government has been troubled from the start, with its members struggling to overcome a decade of mistrust.

The death of Tsvangirai's wife on March 6 further slowed the work of government. Tsvangirai was slightly injured in the crash. His deputy, Thokozani Khupe, has been the acting prime minister.

"I'm happy to be back home. I'm well," Tsvangirai told reporters on Tuesday. "I'm looking forward to getting back for work." He has a Cabinet meeting on Thursday, as well as a session with businesspeople to discuss reviving the tourism industry.

Tsvangirai returned on a flight that also carried the top Norwegian development official, Eric Solhein. He was beginning a three-day trip during which he was to talk with Tsvangirai and other leaders from the three parties in the unity government.

"I'm here for international cooperation following the formation of (the) unity government," Solhein told reporters at the airport. "We would like to see the release of political prisoners and the return of the rule of law."

The international community has been helping Zimbabwe cope with a cholera and hunger emergency, but withholding significant development aid until it sees president Robert Mugabe cede real power to Tsvangirai, his longtime rival.

The United Nations on Tuesday released updated cholera data. The number of cholera cases and cholera deaths in Zimbabwe has been falling, UN associate spokesman Farhan Haq said at UN headquarters in New York.

While the number is still high, the World Health Organization reported that in the week ending March 14, 2,076 cholera cases were reported, down from 3,812 cases the previous week and over 8,000 cases per week at the beginning of February, he said. The number of fatalities also decreased from 6 per cent of those infected in January to 2.3 per cent in the week ending March 14, Haq said.

Mugabe, in power since independence from Britain in 1980, is accused of ruining a once prosperous nation's economy and trampling its citizens' democratic rights. He remains president under a power-sharing deal brokered by leaders of neighboring countries.