Inflation of 100,000% is Possible

Zimbabwe's economy is definitely heading somewhere - down the drains, yeah all the drains.......

Latest inflation figure was estimated at 100,000% (but compared against which year?). When a country was required to print a larger currency denomination, which in this case was a 10,000,000 (Ten Million) Zimbabwe dollar note, it has sounded to the world that their smaller denomination notes were of no further use. Why was that so?

Previously bus fares were at Z$1.5m (that's in millions) and now, it's Z$3m. School teachers have to quit their jobs and took up menial jobs near their homes leaving schools without teachers in the new year.

A pair of branded lady shoes was selling at Z$150m in early 2008 but it went up to Z$450m lately.

You would be considered lucky if you could get a job which pays you Z$500m per month which worked out to US$100.

Banks have issued new rulings due to chronic shortage of cash:-
* staff who earn over Z$1m a month must be paid by cheques (where high bank charges would eat up a portion too).
* no cheques of Z$50m or above (US$416) are acknowledged by the banks and there are limits on the amount of cheques that can be drawn each day.
* only Z$3m (US$21) could be withdrawn from the ATM (per day I presumed).

In a way, that piece of 10,000,000 dollar note that was issued lately could be quite worthless. Such hyperinflation could happen when a government doesn't control their spendings and when cronies were the ones getting paid if ever spent by the government.

Related blog posting:
* Zimbabwe's 10,000,000 dollars note
* How High Can Inflation Hit Us? 100%? 100,000%?
* What's Happening to Zimbabwe?
Tags: Zimbabwe, Africa, Inflation, Hyperinflation, Economics, Zimbabwe Dollar