Search

 

Cablegate: Where's Inflation Heading?

This record is a partial extract of the original cable. The full text of the original cable is not available.

UNCLAS HARARE 001490

SIPDIS

STATE FOR AF/S
USDOC FOR AMANDA HILLIGAS
TREASURY FOR OREN WYCHE-SHAW
PASS USTR FLORIZELLE LISER
STATE PASS USAID FOR MARJORIE COPSON

SENSITIVE

E. O. 12958: N/A
TAGS: ECON ETRD EINV PGOV ZI
SUBJECT: Where's inflation heading?

1. Summary: After studying the latest Reserve Bank
(RBZ)/Central Statistical Office (CSO) figures and
comparing notes with local economists, we believe year-to-
year inflation will continue to fall to 250-320 percent
through the end of 2004. In early/mid-2005, it will
again head upwards to at least 400 percent. As
parliamentary elections near, mushrooming inflation may
put the GOZ in an awkward position. End summary.

2. Monthly inflation fell sharply Nov 2003-April 2004 (34
to 5 percent) as a consequence of the GOZ's more strident
enforcement of an official exchange rate. During April-
July, it rose each month to a recent 10 percent. While
monthly inflation will almost certainly continue to rise
through the year's end, year-to-year inflation - the
GOZ's historic barometer - should fall as new monthly
figures replace peak rates during Sept-Nov 2003 (25-34
percent per month). The seesaw trend looks like this:

MONTHLY INFLATION RATES

Downward
--------
Nov 2003 34 percent
Dec 11
Jan 2004 14
Feb 6
March 6
April 5

Upward
------
May 6
June 9
July 10

We feel that further devaluations both in the official
and parallel rates as well as higher wage and fuel costs
will push monthly CPI increases to at least 15 percent by
December. Sometime in early/mid-2004, the year-to-year
rate could easily reach 400 percent. (Ten percent
monthly inflation, for example, compounds to an
annualized 272 percent.)

3. Comment: Using the nominal zimdollar exchange rate as
its weapon, the RBZ has declared disinflation as its
prime goal. RBZ Governor Gono forecast a 200 percent
rate by year's end, just before it peaked at the
hyperinflationary threshold (623 percent) in January.
Even if the year-to-year rate falls to 300 percent, the
GOZ and RBZ will declare victory. Celebrations may be
short-lived. If year-to-year inflation starts upward
before the scheduled March parliamentary elections, it
may complicate GOZ claims of economic rebound, even
according to its narrow performance measure.

Dell

© Scoop Media

 
 
 
World Headlines

 

Tigray: Eritrean Refugees ‘scared And Struggling To Eat’ Amid Aid Obstacles
For the first time in weeks, aid teams have reached refugee camps in Ethiopia’s Tigray region, only to find that some Eritrean nationals living there have likely died of preventable diseases, while others are “scared and struggling to get enough to eat”, the UN Refugee Agency, UNHCR, said on Friday...
More>>

UN News: Rare Coral Reef Discovered Near Tahiti Is ‘Like A Work Of Art’, Says Diver
One of the largest coral reefs in the world has been discovered by a UN-supported scientific mission off the coast of Tahiti. Announcing the stunning find on Thursday, UNESCO said that divers had explored large rose-shaped corals spanning some three kilometres, at depths of between 30 and 65 metres... More>>


Tonga Eruption: At Least 3 Dead, Amid Severe Destruction
At least three people have died in Tonga following the massive volcanic eruption and subsequent tsunami wave that hit over the weekend. Homes and other buildings across the archipelago have suffered major damage... More>>

Ethiopia: UN Chief Lauds ‘Demonstrable Effort To Make Peace’

The UN Secretary-General on Wednesday said he was “delighted” to learn that “a demonstrable effort to make peace” in Ethiopia is finally underway, according to information relayed to him by the African Union High Representative for the Horn of Africa... More>>


Tigray: Agencies Suspend Aid As ‘Scores’ Are Killed Due To Airstrikes
Recent airstrikes on camps for internally displaced persons and refugees in Tigray, northern Ethiopia, have reportedly killed scores of civilians, including children, and left many more injured... More>>


UN News: For 25th Year In A Row, Greenland Ice Sheet Shrinks

2021 marked the 25th year in a row in which the key Greenland ice sheet lost more mass during the melting season, than it gained during the winter, according to a new UN-endorsed report issued on Friday... More>>


 
 
 
 
 
 
 
  • Pacific.Scoop
  • Cafe Pacific
  • PMC