According to American economist and applied economics professor, Steve Hanke, Zimbabwe is on the brink of another hyperinflation episode.
Hanke recently estimated Zimbabwe’s monthly inflation rate to be at 102% as of June 7, 2023.
He warned that if the current rate of inflation persists, Zimbabwe could reach hyperinflation in just five days.
Zimbabwe has experienced hyperinflation in the past, namely in 2008.
The current economic situation in Zimbabwe is dire, with some retailers selling a loaf of bread for ZWL 12000.
Professor Hanke’s warning underscores the urgent need for Zimbabwe to take immediate action to stabilize its economy and address the underlying issues causing the inflation. Failure to do so could result in severe consequences for the people of Zimbabwe, as hyperinflation has devastating effects on the economy and the population as a whole.
In 2008, Zimbabwe experienced one of the worst cases of hyperinflation ever, with estimated annual inflation at one point of 500 billion percent, according to the International Monetary Fund.
While the price hikes are mainly for commodities priced in the Zimbabwe dollar, some businesses are also raising prices in United States dollars.
In 2008, businesses removed commodities from shelves to prevent making losses as the Zimbabwe dollar rapidly shed value against other currencies.
The government has issued a cocktail of measures to stabilise the macroeconomy and the depreciating local currency. There is no evidence to suggest that the measures are effective so far.