Zimbabwe policies spur buying panic as stores run out of basic goods

The government of Robert Mugabe has ordered businesses in Zimbabwe to roll back prices to mid-June levels spurring panic buying as store shelves empty of basic goods. Mugabe’s regime has horribly mismanaged the economy and the people of the African nation face food shortages as prices spiral higher and higher with the highest inflation in the world – 10,000 percent. Mugabe has accused businesses of raising prices in order to topple his government and is using not only the police but a pro-government youth militia known as the “Green Bombers” to beat shopkeepers who have not lowered their prices.

This a report of the dismal situation in today’s Guardian:

Panic buying swept through the streets of Zimbabwe yesterday, as stores ran out of basic goods and shopkeepers complained that they were selling goods at a loss after the government ordered prices to be halved in a last-ditch effort to tackle hyper-inflation.

Shoppers desperate to restock in a country ravaged by shortages cleared out supermarkets in the capital, Harare, and Bulawayo, where shelves were bare of essential items such as maize meal, cooking oil, sugar, milk, soap, bread, chicken, beef and other items.

"I am selling goods at less than what I paid for them. I am selling bread at less than what it costs to bake it," a distraught Harare shopowner said, pleading for anonymity so as to avoid government retribution. "I am following the government's orders. Army soldiers came here this morning to check prices. Mugabe has threatened to seize any business that does not do what he says. I don't know how long this can continue."

Inflation is currently estimated at 10,000% and rising. Armed soldiers and the youth militia are patrolling shops and open-air markets to enforce President Robert Mugabe's price controls. More than 200 retailers have been charged with crimes of charging more than the official prices, police confirmed yesterday.

By making it uneconomic to produce and sell goods and food, Mr Mugabe risks further damaging the country's limping economy, which has shrunk by 50% over the past seven years. Economists warn the move will not control inflation but will simply push goods on to the thriving black market. Analysts say many companies and industries could go bankrupt, adding to Zimbabwe's unemployment, which is already estimated at 80%.

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The price cuts were announced last week after Mr Mugabe gave a vitriolic speech in which he threatened to take over any business or mine that does not adhere to his policies.

"This nonsense of price escalations must come to an end," he said, adding that his government would not be undermined by businesses using "British tactics". "We will nationalise them if they continue with their dirty tricks," he said.

Following the speech the government ordered prices to be cut in half or more.

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The actual level of inflation is unclear as the government has not released its figures for June. The official rate for May of 4,500% is said by economists and major businesses to be far below the actual rate of 10,000%. Many have predicted that inflation will soar, including the American ambassador to Harare, who forecast that inflation would hit 1,500,000% before the end of 2007.

Mr Mugabe's chaotic and violent seizures of white-owned farms provoked a collapse of the agricultural sector that has left poor black farmers even worse off than before, according to agricultural experts. The UN estimates that one-third of Zimbabwe's 12 million people will need food aid over the next year.