Zimbabwe Hyperinflation Triggers Panic-Buying

Driving to work last week, Dennis Zhemi found his usually busy neighborhood garage in the Zimbabwean capital Harare deserted and a forecourt attendant signaling “no fuel”. For Zhemi, it was a worrying sign that Zimbabwe’s chronic economic collapse could be heading for another vicious downwards spiral of basic shortages, hyperinflation and social chaos.

Zhemi’s heart sank as he drove on, hoping to refuel at the next station, but at least 40 other cars were queuing on the side of the road towards the petrol pumps. “Immediately, I was reminded of 2008 when we slept in fuel queues and I prayed silently that we don’t return to those days,” the 43-year-old human resources consultant told AFP.

A decade ago, hyperinflation in Zimbabwe wiped out personal savings, left shops empty and made it all but impossible to buy a tank of petrol or daily groceries. Inflation peaked at 500 billion percent before the national currency was abandoned in a favor of the US dollar, and the economy never recovered.

Fears of a repeat of those desperate days have grown in recent weeks in Zimbabwe, and panic-buying has seen prices rocket.

The stockpiling has been driven by a collapse in confidence in the parallel “bond note” currency that was launched by 93-year-old President Robert Mugabe’s government nearly a year ago.

Bond notes dispersed by banks and ATMS are in theory worth the same as the US dollar, but consumers worry the currency could be rendered worthless like the old Zimbabwe dollar that was scrapped in 2009.

“We are already witnessing shortages of basic commodities,” Peter Mutasa, president of the Zimbabwe Congress of Trade Unions, told AFP.

“The situation has been triggered by lack of confidence in the bond notes. We are being driven to barter for goods as there is no hard currency in the banks.”

Currency traders who gather near the foreign bus terminal in Harare now offer to exchange one US dollar for 1.37 bond notes—an illegal transaction that underlines the bond note’s weakness.

For non-cash bank transfers, the traders offer to pay 1.50 in bond notes for each US dollar, AFP reporters witnessed. Like many shops in Zimbabwe, one small supermarket in Harare visited by AFP offers several different prices for goods—an illegal but common practice.

Mugabe, whose land policies are widely blamed for Zimbabwe’s economic collapse since 2000, this week railed against currency “saboteurs” and vowed that the “price hikes would be dealt with”.

Further economic breakdown could reignite street protests that shook Mugabe’s regime last year, and the president used a speech on Thursday to acknowledge the inflation threat.