Zimbabwean consumer prices rose at the fastest pace since 2010 last month, as a shortage of foreign exchange curbed supplies of basic commodities including wheat.
The inflation rate climbed to 5.4 percent, from 4.8 percent in August, the Harare-based Zimbabwe National Statistics Agency said in an emailed statement Monday.
Prices increased 0.9 percent in the month, more than double the rate in August, it said.
Ncube introduced a tax increase on money transfers last week to try to stabilize the government’s finances. The announcement triggered a rise in basic-commodity prices, stoking fears of an inflationary spiral and leading to queues at gas stations.
Many shops, under pressure from the government, are restricting customers’ purchases to prevent hoarding and ensure everyone gets something. Others have gone further: Yum! Brands Inc. temporarily shut some of its KFC outlets this week, saying it couldn’t find enough dollars to pay suppliers.
On Thursday, police arrested and beat two leaders of the country’s main trade union at protests over the increasing cost of living, the labor group said in a statement.
The country’s quasi-currency, the bond note, has plunged in value. It now takes 4.3 of them to buy one U.S. dollar, the weakest exchange rate on record, according to the Zim Bollar Index, a local website. In early September, the rate was 1.75.
Bond notes were introduced two years ago and were meant to represent the value of one dollar. Zimbabwe, having scrapped its own worthless dollar to end 500 billion-percent inflation in 2009, accepts them and the greenback, euro and rand, among others, as legal tender.
Equities have also been roiled. The main stock-market index surged 60 percent this week.
In Zimbabwe’s skewed markets, rising share prices are — like in Venezuela, where the International Monetary Fund says the inflation rate will reach 1.4 million percent this year — a sign that stresses are building in the financial system. Local traders pile into equities when bond notes depreciate and they think inflation will accelerate. It’s forced foreign investors including Franklin Templeton, JPMorgan Chase & Co. and Cape Town-based Allan Gray — who can’t repatriate their money because of capital controls — to write down the value of their assets.
“The spike in stocks is an inverse mirror of the local shortage of dollars,” Hasnain Malik, Dubai-based global head of equity research at Exotix Capital, said in a note to clients on Oct. 11.
The dearth of foreign currency is making life tougher for Zimbabweans.
“We are now charging 20 real dollars for an X-ray, or 100 bond notes,” said Itai Chamunorwa, who works at a private surgery in Harare. “We’re just following what others are doing.”
Other businesses have stopped accepting bonds notes or electronic payments — which are even less valuable than the notes — altogether, and will only take hard cash.
Central bank Governor John Mangudya said this week that Zimbabwe has enough foreign exchange to pay for imports of fuel, wheat and other items. The crash in bond notes is caused by “opportunists” trying to sow “unnecessary panic and despondency,” he said.
Mnangagwa, 76, has urged calm.
“We must all be realistic,” he wrote on Twitter. “There are no silver bullets or quick fixes. There is no need to panic. The government is guaranteeing the availability of all essential commodities.”
Zimbabweans are yet to be convinced, according to John Robertson, an independent economist living in Harare.
“It’s all about the lack of confidence in the government’s ability to resolve problems,” he said. “People easily panic. It’s become a psychological problem rather than one of economic sense.”
For Mushanguri, the beer-drinker, it’s a far cry from what he thought would happen after the elections.
“All those high hopes we had are fading fast,” he said.