Inflation at 164,900%!!!

From FT Alphaville:

As the ZANU-PF meets to contemplate a presidential run-off, the latest economic data is in. According to Zimbabwe’s central statistics office, inflation accelerated to 164,900 per cent in January, from 100,580 per cent the months before.

As these levels, the rise in practical terms is academic. But the chart below, drawn up by Renaissance, shows that even by Zimbabwe’s sky-high standards this is something else.

They note that the escalating inflation is “entirely due to the continued printing of money by the reserve bank, against the backdrop of ever-scarcer goods and services.” There remains speculation that the official numbers may underestimate the true rate of prices rises – though the month-on-month numbers, arguably a closer real approximation to what’s happening on the ground, remain volatile. As the country approaches full effective dollarisation, Renaissance adds:

…we think a second round of elections would have serious implications for the collapsing economy, and reinforce inflationary pressures.

This inflation number from Zimbabwe is too high to comprehend. What cost $1 today will cost $1650 next year, am I correct? How can this happen? Does that mean the reserve bank print money like crazy, as if printing money is creation of wealth?

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About Zarathustra

Zarathustra: Founder and Managing Editor of Also sprach Analyst. Once an analyst, now an investor and entrepreneur. Based in Hong Kong, but Londoner at heart.