Friday, August 24, 2007

How High Can Inflation Hit Us? 100%? 100,000%?

I have seen a bad inflation hitting Malaysia's economy way back in 1997/1998 where bank's interest rates were riding above 12%/13%. Lots of people with high mortgages or taken lots of loans were badly hit. Shares were down to its lowest in years during that period. Margin calls on shares' trading accounts were badly hit. Foreign funds were heard pulling out. Country's foreign exchange and the local Ringgit Malaysia were in adverse situation.

Should the shopkeepers / stalls /businesses continue to increase their prices in order to maintain their profit margins or just to barely survive?

Daily food consumption's pricing increased due to other factors which caused their cost to increase. These were the signs.

Unfortunately, Zimbabwe, located in Africa, is experiencing the same kind of economic situation if not, worse than Malaysia. My previous postings on Zimbabwe did mention that their inflation rates were around 2000% early this year and then shot up to the region of 3,700% in May/June later.

Today, it could have reached an unprecedented scenario where common folks like you and me wouldn't be able to survive in the land of Zimbabwe. Only the filthy rich people will live through it. The inflaton rate of today? 7,638%

What figure was that? Means to say that a loaf of bread that cost RM2.00 (US$0.57) in August 2006 would have cost RM152.76 (US$43.65) this morning. Will you buy that loaf of bread? You have to as other type of food would be beyond your financial capabilities. That's how bad it is in Zimbabwe now.

According to economists and International Monetary Fund, if the Zimbabwean government still ding dong on the economics situation and slow to respond, an inflation rate of 100,000% has been predicted. The country will be doomed by then.

Current steps taken by the government to arrest the inflation:-
* ordered shopkeepers to slash their prices and arrested anyone who has failed to obey
* a new 200,000 Zimbabwe dollar note was launched
* created a commission to find a way to control soaring living costs

Effects of the inflation:-
* estimated three million people fleeing the country for South Africa
* unemployment rate stands at about 80%
* are mass shortages of fuel and foodstuffs
* some producers, fearing making a loss, cut production, meaning the move exacerbated shortages, leaving shop shelves empty
Tags: Zimbabwe, Inflation, International Monetary Fund, Mass Shortage, Unemployment Rate, Economics, Economy, Africa, Zimbabwe Dollar

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2 Comments:

Blogger Sunshine said...

OMG thats a really disturbing kind of info, thank god im not in zimbabwe, with that kind of inflation rate i think i would have resorted to eating tree roots and drinking rain water!

25 August, 2007 08:16  
Blogger Johnny Ong said...

definitely its not good in zimbabwe at the moment. hopefully the govt intervene fast enough to stabilise the situation but with corruption in the picture, its harder.

25 August, 2007 19:16  

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