Thursday July 17, 2008

Runaway hyperinflation : Zimbabwe inflation rate hits 2.2 million percent officially

This article belongs to the Zimbabwe inflation watch story arc.

channelnewsasia.com :

Zimbabwe's annual rate of inflation has hit a new record high of 2.2 million percent, the central bank's governor Gideon Gono said on Wednesday [16 Jul 2008]. The figure is the first from the authorities in Zimbabwe since the announcement of the rate for February, when it was put at around 165,000 percent.

- So the Zimbabwe government has finally put out an official CPI inflation rate figure, after months of silence. The 2.2 million percent figure is probably understated though. A month back, international observers said that the actual rate was closer to 4 million percent, so it won't be too surprising if actual street price inflation is either already at or is soon going to hit 10 million percent. They ought to be switching over to scientific notation already, if only they had an electronic payment network to support that. For now, it's still currency notes, of which they issued the $500 million dollar banknotes a while ago, and chances are good that they would have to switch over to billion dollar notes soon, making holders of such notes instant "billionaires" - instant "trillionaires" should not be too far off.

Zimbabwe is the modern day hyperinflationary cautionary tale. Will the rest of the world take heed and avoid the same fate, or are we to also follow them down the current path, the path that leads us to global hyperinflation?

See also :

1. Zimbabwe: IMF estimates inflation at 150,000%
2. Zimbabwe inflation hits 165,000%
3. Zimbabwe adds $500 million dollar note as hyperinflation runs on
4. Runaway hyperinflation : Zimbabwe inflation rate now over 1 million percent

(2008-07-17 16:47:32 SGT) [Biz] Permalink Comments [2]

Europe inflation hits record 4% in June 2008; Germany, France inflation rate at 15, 17 year highs

Inflation in the 15 countries sharing the euro hit a record 4% in June 2008 on soaring oil prices, according to official EU data on 16 Jul 2008. Driven by record oil prices, Eurozone inflation in June spiked to the highest rate since the launch of the euro in 1999. Oil prices hit records over $140 a barrel in June, pinching the purchasing power of consumers already struggling to cope with soaring food prices. Soaring oil prices lifted inflation in Germany to a near 15-year high and in France to a near 17-year high. Inflation in the 27-nation European Union rose even faster than in the Eurozone, hitting 4.3% in June. Record inflation adds to consumer and businesses' pain just as they are struggling to cope with flagging economic activity and has triggered protests by fishermen and truckers.

- Despite the strength of the euro, the European inflation rate has risen steadily over the past year, starting with an unexpected rise in the money supply, followed by the inflation rate hitting 3.1% in Nov 2007, and now it stands at a record 4%.

Germany is a country which should be keenly aware of the dangers of inflation, as they have gone through the Weimar period of hyperinflation with their reichmarks back in the 1920's (an early predecessor of the situation in Zimbabwe). Similarly, France had their hyperinflationary episode with their assignats during the French Revolution. In spite of all that history, they are beginning to feel the effects of inflation yet again. And once inflation gets started, it is hard to stop. This time round, the inflation is global, hitting the US, Europe, and Asia all at the same time, and if world leaders are not too careful about it, they could be leading us down the path of global hyperinflation.

See also :

1. European money supply growth accelerated unexpectedly in October
2. China inflation surges to 8.7% in Feb 2008, highest in 11 years
3. India wholesale inflation rate rises to 11%, a new 13-year high
4. Singapore inflation rate hits new 26-year high of 7.5% in Apr 2008
5. Malaysia inflation rate could hit 9-year high of 5% on petrol and diesel price hikes

(2008-07-17 12:55:50 SGT) [Biz] Permalink

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