FINANCE minister Herbert Murerwa yesterday revised upwards the year-end inflation forecast to 1 000%, highlighting government’s failed bid to control
Presenting the mid-term fiscal policy review, Murerwa said the inflation rate would close the year at between 950% and 1 000%.
Initially, central bank governor Gideon Gono had projected that inflation would close the year at around 250%.
“GDP and average annual inflation for 2006 are projected at 0,3% to 0,6% and 950% to 1 000% respectively,” Murerwa said.
Murerwa attributed the rising inflation rate to excessive money supply growth.
“In this regard money supply growth rates of 669% to May become inconsistent with the prevailing economic and business activity. The monetary authorities will therefore be introducing measures to curtail broad money growth to levels that are in line with our targeted inflation-reduction programme,” Murerwa said.
The Finance minister said the high monetary growth had not been supported by increased production.
Murerwa said rising inflation was also being fuelled by unbudgeted public sector borrowing requirements.