International economist and currency expert Steve Hanke says Zimbabwe’s inflation now sits at 266 percent following the Reserve Bank of Zimbabwe’s recently-announced monetary policy.
Just two weeks ago, Hanke said the country’s inflation was pegged at 242 percent, hence a 24 percent jump to today. The John Hopkins University professor said government made a mistake when it initially failed to admit that the surrogate currency’s rate was not at par with the United States dollar.
He added that the Real Time Gross Settlement dollars (RTGS$) that were introduced in the monetary policy will only make life unbearable for Zimbabweans. “By issuing the bond notes and RTGS at par to the dollar and then devaluing, Zimbabwe has robbed its citizens.
“This, among other things, has produced a trust deficit between citizens and the government. Cancerous RTGS$ will only increase budget deficit and make matters worse,” Hanke said.
This comes after the renowned economist rubbished the inflation figures released by the Zimbabwe National Statistical Agency (Zimstat), saying the country’s year-on-year inflation rate now stood at 242 percent. Zimstat reported that year-on-year inflation rate for the month of January surged to 56,9 percent, making it the highest in 10 years.
The statistics agency attributed the increase to a rise in the price of basic goods and beer. Writing on his Twitter account, Hanke said Zimbabweans must not be alarmed by the “official” inflation rate released by Zimstat as the real rate is “far scarier.” “Zimbabweans are alarmed that the official inflation rate has spiked to 56,9 percent, the highest in 10 years.
The real number is far scarier,” Hanke said. “I use Purchasing Power Parity (PPP) to calculate inflation accurately and reliably and by my measure, year-on-year inflation is at a whopping 242 percent per year,” he added. Hanke’s calculations are derived from the Old Mutual Implied rate, which indicates that the inflation rate in Zimbabwe rose sharply.
Over the last couple of months, Hanke has been consistent in measuring the country’s inflation rate.
As of January 16, Hanke said the cumulative inflation hit 236 percent, a figure much higher than the 42,09 percent released by Zimstat for the month of December.
He also warned that the economy will lapse within a year or less if the country fails to remove bond notes from the system.