Gono warns of 'inflation dragon'
11/08/2006 13:33  - (SA)  

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Harare - Zimbabwe's central bank chief urged a collective fight against the "inflation dragon" on Friday, saying it still posed a major threat to the economy despite falling to just under 1 000% recently.

Gideon Gono said: "The successive modest decline in annual inflation over the months for June and July, is a welcome development that must re-energise all Zimbabweans to re-commit in the conviction that collectively we can tame the inflation dragon.

"As we welcome this positive development, I wish to however strongly urge the nation to remain utmostly vigilant as the venomous breath of inflation monster is still strong in the economy."

Annual inflation 'on rollercoaster ride'

The country's statistical office announced on Wednesday that Zimbabwe's annual inflation declined to 993.6% in July from 1 184.6%.

The southern African country's annual inflation had been on a rollercoaster ride since December 2004 after it shot up to 622.8%.

It dipped to a comparative low of 123.7% in March 2005 before shooting up again to a peak in May 2006 of 1 193%.

Although inflation had been on the decline since June, life remained tough for millions in Zimbabwe, barely able to make ends meet.

Gono expressed concern on the continued wave of "unjustified and ad hoc price hikes", despite a government price freeze order.

Zim's economy 'on a downturn'

Last week, the central bank introduced sweeping currency reforms, including slashing three zeroes from the local currency, to fight inflation.

Gono said: "Whilst the recent package of monetary policy measures are expected to impact favourably on inflation for the next three to six months, the on-going unscrupulous pricing behaviour by some market players is threatening to reverse the gains already registered on the inflation front."

Zimbabwe's economy had been on a downturn for the past seven years, dogged by runaway inflation and massive unemployment. At least 80% of the population lived below the poverty threshold.

However, President Robert Mugabe blamed the recession on the imposition of targeted sanctions by Western nations after contentious presidential elections.

Critics also blamed the country's economic problems on the controversial seizure of white-owned farms to landless blacks often without any farming expertise, saying it had wreaked havoc on agricultural output.

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