Zimbabwe Business Watch : Week 8
February 18th, 2008
The Consumer Council has now admitted that it is extremely difficult to compute the bread basket as commodities are not sufficiently available. This problem is much the same for estimating the Poverty Datum Line and the Consumer Price Index largely due to the meaningless nature of the data by the time it is made public. This makes life very difficult for businesses as somehow they must exercise social responsibility without really knowing at what rate the cost of living is rising.
Salary increases are now in excess of 100% in some cases ad it is widely accepted that inflation is probably higher than 150 000% as we speak. Using old data, the government mouthpiece (Herald) has admitted inflation at 66 000% commerce and industry is perilously placed as a slip in judgment or a miscalculation on rapidly rising costs could see collapse. Monthly inflation sometimes exceeds profit margins by 12 – 15 times which makes business very vulnerable.
Equity markets slumped a further 16% in one day due to the central banks failure to provide a surplus in the money market. This has forced down the cost of large lots of currency. The stock market remains in limbo, negative sentiment is rising and this is compounded by talk of a looming banking sector crisis. The reality on the ground is that, in the household to business and government, it is becoming extremely difficult to cope with the rapidly changing environment and generally there is a failure to adapt and protect investment and performance.
