This record is a partial extract of the original cable. The full text of the original cable is not available.

181345Z Nov 03

UNCLAS HARARE 002255 
 
SIPDIS 
 
STATE FOR AF/S 
NSC FOR SENIOR AFRICA DIRECTOR JFRAZER 
USDOC FOR 2037 DIEMOND 
TREASURY FOR OREN WYCHE-SHAW 
PASS USTR FLORIZELLE LISER 
STATE PASS USAID FOR MARJORIE COPSON 
 
¶E. O. 12958: N/A 
TAGS: ECON EFIN EINV PGOV ZI
SUBJECT: Inflation Hits 526 Percent 
 
 
¶1. Summary:  Year-on-year inflation has reached 526 
percent.  Jarred by spiraling prices, Zimbabweans 
anxiously await Thursday's budget speech. End Summary. 
 
¶2. The Central Statistical Office's most recent inflation 
figures encompass October 2002-October 2003.  Basic foods 
and transportation are now beyond the reach of most 
Zimbabweans, whose salaries continue to lag inflation. 
(Local joke:  "Your take-home-pay no longer takes you 
home.")  Even more worrisome, an alternative 
PricewaterhouseCoopers consumer price index demonstrates 
that the poor bear the brunt of high inflation.  The 
accounting firm pegs October inflation for high, medium 
and low income Zimbabweans at 13, 17 and 39 percent, 
respectively. 
 
¶3. Comment:  Still, neither official nor unofficial 
figures tell the whole story.  For example, rail 
transport, far cheaper than intercity buses, is often 
unavailable due to the GOZ's inability to afford imported 
diesel.  (Thanks to nearly-free electricity from South 
Africa, Zimbabwe's few electric trains run more 
reliably.)  Given its limited fiscal and monetary 
options, the GOZ can probably not rein in inflation 
without raising interest rates, currently about 400 
percent negative.  But few contacts believe the GOZ will 
take that route when it unveils the 2004 budget on 
Thursday.  More likely, the GOZ will blame the economy's 
ills on the parallel currency market and place new 
restrictions on business activity. 
 
Sullivan