Zimbabwean businesses and households are fearing a repeat of the hyperinflation seen more than a decade ago as prices of basic commodities spike after a sharp weakening in the local currency, despite government efforts to boost it.
The Zimdollar has so far this month plunged more than 50% in value against the U.S. dollar, after the government announced on May 29 measures to encourage the use of the local currency – as opposed to the dollar – in a bid to tame inflation.
The currency has weakened more than 80% since the start of the year.
A loaf of bread now costs 10,000 Zimdollar ($1.67). A week ago, it cost no more than 2,000 Zimdollar.
Earlier this month, Zimbabwe’s main stock market temporarily halted trading to allow the market to “cool off”, after shares rallied on the back of a weakening Zimdollar.
While some retailers have hiked local currency prices, others are trading exclusively in U.S. dollars to cushion themselves from the weakening Zimdollar.