Consumer prices in Zimbabwe have risen at their fastest pace since a spiral of hyperinflation a decade ago and shed new light on the economic reform efforts of President Emmerson Mnangagwa.
Inflation accelerated to 20.9% in October, from 5.4% in the previous month, the National Statistical Office in Zimbabwe said in a statement that was emailed Tuesday. The price of food, which contributes one third to the inflation target, rose 27% from a year earlier.
Mnangagwa, who took over when Robert Mugabe was overthrown a year ago after almost forty years in power, has promised to revitalize the South African economy, to pay back overdue payments and to lure investors. After winning the vote in July, he appointed Cambridge-educated economist Mthuli Ncube as Minister of Finance.
A tax of 2% that Ncube imposed on electronic transactions from October 1 in an effort to generate revenue to repay billions of dollars in debt and ignite the economy contributed to the rise in inflation as companies insisted on cash when no question.
The result was that in a country that left its own currency in favor of a greenback basket and the edge in 2009 after inflation reached an estimated 500 billion percent, electronic dollars are traded at a hard cash discount.
The so-called bond banknotes of the government have also fallen in value and the levy has contributed to shortages of fuel and consumer goods. Mnangagwa said that the tax measure is being reconsidered.