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Inflation

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Everybody seems to have a different figure for inflation in Zimbabwe. The most commonly used is 24000 percent, though occasionally one still sees the government figure of 8000 percent. That's year ON year, of course. I've used the inflation calculator here to get an idea of what the numbers should be. Take the price of an item today (B), the price of the same item at an earlier period (A), apply this formula ((B-A)/A) x 100, and you get the inflation over the period. According to that formula, and using a car service I had done today, and which I last had done this time last year, inflation's actually running at just under 50,000 percent. For instance, last year an oil filter was 300,000 dollars. This year it is 150 million dollars. 150,000,000 - 300,000 = 149,700,000 149,700,000 / 300,000 = 499 499 x 100 = 49,900% What this means in practice is that our house, (a nice house, smart part of town, pool, pretty garden, etc) cost us the equivalent of 2,500 dollars in August 1999. In forex terms that was about 57,000 US. 2,500 dollars is now worth 0.04 of a US cent. that's 0.0004 of a US dollar. That's what 50,000% inflation means on the ground.

1 Comment

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Vin | June 16, 2008 11:03 PM | Reply

hey, phenomenal analysis...you're right that the burma model is what seems to be guiding the govt's actions. i'm keen to know what you think of the situation now. are you still as pessimistic?


What do you think?