In Zimbabwe, even the low income workers are billionaires. Good news? Not quite.
The inflation rate in Zimbabwe is now about 4 million percent, according to Yahoo!News. This is the highest inflation rate in the world.
What does a 4 million percent inflation rate mean in practical terms?
Consider the news reported at WCBStv.com about threshold milk prices in the United States. The threshold milk price reached $4.37 per gallon due to the rising costs of diesel used in the trucks that transport milk to grocery stores. The threshold price is the maximum price retailers are allowed to charge and is based on the price the Federal government pays the farmers for milk.
Now compare the United States milk cost with the milk cost in Zimbabwe. While Americans complain about milk costing over $4 per gallon, a mere pint of milk in Zimbabwe costs 3 billion Zimbabwe dollars, according to Yahoo!News, or 24 billion dollars per gallon. While 3 billion Zimbabwe dollars are only worth about 30 cents in United States dollars, imagine having to carry 3 billion dollars to the store to buy that pint of milk.
Customers walking into a store in Zimbabwe to buy the equivalent of $100 United States dollars in groceries would need to carry along nearly a trillion dollars to pay for those groceries. Does that mean that a Zimbabwean out to buy a television, a computer, or a car needs to go in search of a wheelbarrow first- to carry the necessary cash?
The Zimbabwe dollar is officially divided into 100 cents like the United States dollar. But those cents have become worthless in the face of 4 million percent inflation and are not used in practice. Zimbabwe now issues currency in denominations ranging from $100,000,000 to $50,000,000,000.
Reuter’s Alert Net reported three weeks ago that a loaf of bread cost $600 million in Zimbabwe, and a 2 liter bottle of cooking oil $5 billion, the equivalent of a month’s wages for a low-income worker. But, extrapolating a three week inflation period from the 4 million per annum rate, those prices are “yesterday’s news” presumably having increased some 83,000 percent since that report was issued.
In light of international objections to the recent elections in Zimbabwe, a German company has curtailed shipments of bank note paper used to print the African country’s currency, a never-ending stream of which is necessary to keep up with Zimbabwe’s rampant inflation, the Yahoo!News story indicated.
Sources: Hsu, Cindy, “Milk Prices Set to Jump Over $4 per Gallon,” July 1, 2008, http://wcbstv.com/consumer/milk.prices.gas.2.761609.html; Moore, Matt, “German Firm Halts Bank Note Sales to Mugabe Regime,” July 1, 2008, http://news.yahoo.com/s/ap/20080701/ap_on_re_af/germany_zimbabwe; “Zimbabwean Dollar,” Wikipedia, http://en.wikipedia.org/wiki/Zimbabwean_dollar, Banya Nelson, “Zimbabwe’s Currency Crashes, Prices Rocket,” June 5, 2008, http://www.alertnet.org/thenews/newsdesk/L04243842.htm.