Zimbabwe’s inflation highest in ten years as cash shortage bites

Zimbabwe’s inflation rate rose to 20,85 percent in October, the highest since 2008 from 5.39 percent in September as the rate of prices increases quickened, rekindling memories of hyperinflation.

The southern African nation adopted the U.S. dollar in 2009 after dumping its hyperinflation-wrecked currency, which saw inflation fall to single digits.

On a monthly basis, consumer prices increased 16.44 percent from 0.92 percent in the previous month, the Zimbabwe National Statistics Agency said on Tuesday.

The southern African country grappled with a devastating period of hyperinflation that left its currency worthless and rendered savings and pensions useless in the decade to 2008 when it reached 500 billion percent according to World Bank figures.

It eventually abandoned its Zimbabwe dollar currency and adopted mainly the US dollar and regional currencies.

Some business in Zimbabwe are now demanding cash U.S. dollars only and have raised prices by more than three times for the majority who pay in bond note.

Prices of basic goods rose when the value of the surrogate bond note and electronic dollars collapsed on the parallel market last month, leading to panic buying by consumers.

The latest round of price increases was triggered when the central bank compelled banks to separate foreign currency funded accounts from local accounts funded through transfers, leading to the value of the surrogate bond note currency and electronic dollars collapsing on the parallel market.

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