VZCZCXRO3058
PP RUEHBZ RUEHDU RUEHJO RUEHMR RUEHRN
DE RUEHSB #0737/01 2291157
ZNR UUUUU ZZH
P 171157Z AUG 07
FM AMEMBASSY HARARE
TO RUCNSAD/SOUTHERN AFRICAN DEVELOPMENT COMMUNITY PRIORITY
RUEHC/SECSTATE WASHDC PRIORITY 1786
INFO RUCNSAD/SOUTHERN AFRICAN DEVELOPMENT COMMUNITY
RUEHUJA/AMEMBASSY ABUJA 1676
RUEHAR/AMEMBASSY ACCRA 1548
RUEHDS/AMEMBASSY ADDIS ABABA 1680
RUEHBY/AMEMBASSY CANBERRA 0946
RUEHDK/AMEMBASSY DAKAR 1309
RUEHKM/AMEMBASSY KAMPALA 1737
RUEHNR/AMEMBASSY NAIROBI 4154
RUEHFR/AMEMBASSY PARIS 1507
RUEHRO/AMEMBASSY ROME 2170
RUEHBS/USEU BRUSSELS
RUEHGV/USMISSION GENEVA 0801
RHEHAAA/NSC WASHDC
RUCNDT/USMISSION USUN NEW YORK 1897
RHMFISS/JOINT STAFF WASHDC
RUEHC/DEPT OF LABOR WASHDC
RUEATRS/DEPT OF TREASURY WASHDC
RHEFDIA/DIA WASHDC//DHO-7//
RUCPDOC/DEPT OF COMMERCE WASHDC
RUFOADA/JAC MOLESWORTH RAF MOLESWORTH UK//DOOC/ECMO/CC/DAO/DOB/DOI//
RUEPGBA/CDR USEUCOM INTEL VAIHINGEN GE//ECJ23-CH/ECJ5M//

UNCLAS SECTION 01 OF 02 HARARE 000737 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
AF/S FOR S. HILL 
NSC FOR SENIOR AFRICA DIRECTOR B. PITTMAN 
STATE PASS TO USAID FOR L.DOBBINS AND E.LOKEN 
TREASURY FOR J. RALYEA AND T.RAND 
COMMERCE FOR BECKY ERKUL 
ADDIS ABABA FOR USAU 
ADDIS ABABA FOR ACSS 
 
E.O. 12958: N/A 
TAGS: ECON EFIN PGOV ZI
SUBJECT: PRIVATE SECTOR PUTS INFLATION AT MID-20,000 PERCENT 
 
REF: HARARE 0657 
 
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Summary 
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¶1. (SBU) The respected PricewaterhouseCoopers (PWC) monthly 
report on the cst of living put Zimbabwe's inflation rate in 
th mid 20,000 percent in July, down several thousandpercent 
from its June figures.  The monthly rate of increase 
collapsed from the triple to the single digits in July as a 
result of the GOZ's price crackdown. Up to half of the items 
in the consumer basket, however, have disappeared from the 
shelves, with low-income earners affected most by the ensuing 
disruption in supply. The rate of inflation measured by the 
actual prices the consumer pays for food and goods, including 
increasingly on the black market, is likely to keep rising. 
End Summary. 
 
¶2. (SBU) The respected PWC Cost of Living Analysis for the 
month of July put the annual rate of inflation at 26,029 
percent for low-income earners, 24,473 percent for high 
earners, and 23,726 percent for the middle-income category, 
down between about 2,000 and 5,000 percent from the previous 
month. The main driver in the annual increase for the 
low-income group was a 37,900 percent rise in the cost of 
vegetables and fruits, which make up about 50 percent of that 
consumer basket, plus a 35,700 percent increase in the cost 
of transport. 
 
¶3. (SBU) As a result of the GOZ's directive to peg prices at 
the June 18 level (reftel), the monthly rate of increase in 
the cost of living in July collapsed from a record high 
average of 209 percent across the income groups in June 
(roughly triple the May rate) to an average of 7 percent in 
July.  Notably, the cost of schooling still jumped 180 
percent in July for low earners and rent surged 200 percent 
for the same group. 
 
¶4. (SBU) PWC reported that 26 percent of the goods in the 
high-income basket, 31 percent of the middle-income products 
and 54 percent of the low-income basket were unavailable in 
the formal market in July, indicating that the poor have been 
hit worst by the breakdown in the supply chain.  Among the 
products missing entirely from the shelves were eggs, most 
meat products, the favorite local soft drink, washing soap, 
and washing powder. 
 
¶5. (U) The Consumer Council of Zimbabwe (CCZ) reported annual 
inflation in June at 13,445 percent. It calculated that 
prices had risen 126.8 percent in the month of June by the 
time the Cabinet Taskforce intervened, with the highest 
monthly rates of increase in white sugar (164 percent), fresh 
milk (137 percent) and rice (186 percent). CCZ's July figures 
are not yet available.  The GOZ's Central Statistical Office, 
the official source of the Consumer Price Index, has not 
issued inflation figures since April. 
 
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Comment 
 
HARARE 00000737  002 OF 002 
 
 
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¶6.  (SBU) Newly announced prices represent a modest loosening 
of price controls, but the new prices still do not cover all 
costs and a profit margin, and are unlikely to re-vitalize 
the supply chain.  Every indication is that the real rate of 
inflation (as reflected in actual consumer purchases, 
including those increasingly made on the black market) is 
stuck well in the 5-digits and will likely rise as long as 
the GOZ fails to address core economic issues. 
DHANANI