ZIMBABWE’S CURRENCY CRISIS: WHY PRICES KEEP RISING
Zimbabwe is facing a big challenge with its local currency, ZiG, which has lost more than 49% of its value since it was introduced in April. While the government says this new currency has stabilized the market, the truth on the ground tells a different story. Prices are still going up, and people are struggling to keep up with the rising costs of living.
The government claims that inflation, the rate at which prices are rising, is at 3.7% for the year as of August. But independent economists disagree. They say the real inflation rate is closer to 858%. This huge difference between what the government says and what economists are reporting shows that the authorities may not be giving a clear picture of what is really happening with prices and the economy.
One example of rising prices is the cost of Mazowe, a popular juice that many families in Zimbabwe buy. Back in February, a bottle of Mazowe cost US$3. But by now, the price has jumped to US$7.20. That’s more than double the price in just a few months. Meanwhile, people’s salaries have stayed the same, and the local currency, ZiG, has lost its buying power. This means that even though people are earning the same amount, they can afford less than they used to. This problem is not just about Mazowe; it applies to many other basic items that people need to buy every day.
The government also says that the exchange rate between the US dollar and the ZiG is stable at US$1: ZiG13.8. But in the black market, where many people exchange their money, the rate is much worse at US$1: ZiG30. This gap between the official rate and the black market rate shows that the local currency is weak, and it is causing even more inflation, or price rises.
Zimbabwe has had many different versions of its currency since 1980, and each time, people have faced challenges with inflation and price rises. When the ZiG was launched in April, the government hoped it would bring some stability. The authorities say that this new currency is backed by gold and supported by the country’s foreign exchange reserves. This means that the government says it has enough foreign currency to support the value of ZiG.
The governor of the Reserve Bank of Zimbabwe, John Mushayavanhu, gave a positive report in his latest statement. He said that inflation pressures are under control, with month-on-month inflation numbers of -2.4%, 0.03%, -0.1%, and 1.4% for May, June, July, and August of 2024, respectively. He also claimed that the exchange rate had remained stable since April. According to him, the country is receiving more foreign currency, which helps keep the exchange rate stable, and the banking system is working well. The government even expects the economy to grow by 2% in 2024.
But for many Zimbabweans, these words do not match what they are seeing in their daily lives. While the government paints a picture of stability, the reality is that the ZiG is losing value, and prices continue to rise. People are finding it harder and harder to afford the basic things they need.
The ZiG, which was supposed to solve Zimbabwe’s currency problems, has not been able to stop inflation. Instead, the country remains stuck in an economic crisis, with prices continuing to rise, and many people unable to cope with the cost of living.
This situation highlights the gap between what the government says and what is really happening. While they claim that the economy is stable, the reality is different for the people on the ground. Zimbabweans are still facing a difficult time as inflation eats away at their income, and the ZiG loses its value.
In the end, it seems that the new currency, ZiG, has not solved Zimbabwe’s economic problems. Instead, it has become just another chapter in the long story of the country’s currency challenges. The people of Zimbabwe continue to struggle with rising prices, while the authorities insist that everything is under control.
