Zimbabwe’s Inflation Rate Jumps After ZiG Currency Devaluation
TLDR
- Zimbabwe's monthly inflation rate surged to 37.2% in October due to a 43% devaluation of the gold-backed currency ZiG against the dollar.
- The devaluation widened the disparity between official and street exchange rates, impacted by dollar shortages from higher food imports during a regional drought.
- September's significant devaluation of ZiG led to a three-month trend of increasing prices since its introduction in April.
Zimbabwe’s monthly inflation rate soared to 37.2% in October, up from 5.8% the previous month, driven by a steep devaluation of the gold-backed currency, the ZiG (Zimbabwe Gold).
The devaluation on September 27, which reduced the ZiG’s value by 43% against the dollar, exacerbated price pressures, according to the Zimbabwe National Statistics Agency.
This marks the third consecutive month of rising prices since the ZiG was introduced in April. The currency’s devaluation widened the gap between official and street market exchange rates, partly due to dollar shortages following increased food imports amid a severe drought in southern Africa.
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Key Takeaways
The price hikes echo past periods of hyperinflation in Zimbabwe when rampant money printing erased savings and led to the issuance of a 100 trillion Zimbabwe dollar note. In response to the recent devaluation, public utilities and mobile network operators raised tariffs, and the government granted state workers a $40 local currency pay hike, which quickly lost value as the parallel market rate climbed to 40–50 per dollar, significantly higher than the official rate of 27.69. The inflationary surge highlights ongoing challenges in stabilizing the ZiG as Zimbabwe navigates economic pressures linked to currency volatility and import reliance.
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