A Note on Zimbabwe’s Official Inflation Rate
by

Steve H. Hanke
Professor of Applied Economics
The Johns Hopkins University
and
Senior Fellow
The Cato Institute

On 9 October 2008, the state-owned Herald newspaper reported that Zimbabwe’s Central Statistical Office had belatedly concluded that the official annual inflation rate for July was 231 million percent. Based on the HHIZ, the annual inflation rate on 25 July was 318 million percent.

At first glance, it appears that the official inflation rate and the market-based, HHIZ rate are at odds with each other for July 2008. Such a conclusion is incorrect. Unlike the HHIZ, which is updated daily and reported on a weekly basis, the official inflation statistics are only available monthly and with a long time lag between data collection and reporting. It takes time to collect official statistics. For example, we must assume that they cannot be collected in one day, but must be collected during a month. With a raging inflation, the official monthly inflation rate must, therefore, be considerably lower than the inflation rate based on a HHIZ value taken on the last trading day of a month. The accompanying table tells the story. The bottom line: even though the official July 2008 data were reported with over a two-month lag, they are a reasonably accurate reflection of the monthly inflation picture in Zimbabwe for July. That said, for those who desire both accuracy and timeliness, the HHIZ is a superior metric.

13 October 2008