Major causes of inflation in Zimbabwe and southern africa in general and (possible solutions)

Introduction Inflation can be described as a temperament for the world(a) price level to increase everywhere a given metre period. It can also be viewed as a deterrent example where too more money is chasing few goods. Inflation is usually measured by the Consumer Price Index (CPI) where a representative basket of consumer goods is analysed for changes in the price level over a defined time frame. Generally, fanfare cores from pray pull, cost urge and imported inflation. indigence pull a get holds due to supply cheek bottlenecks which will be outweighed by increase demand. Cost push inflation leave behinds when manufacturers and producers of goods and services pass the increases in the cost of employment to their customers and this is reflected in the price increases. Imported inflation results from increased costs in the acquisition of forex and this will be passed to the customers as higher(prenominal) price. Causes of Inflation in Zimbabwe since 1999 Rise in the i ntertheme oil prices The turf out in the oil prices led to general increase in prices of most commodities in the country as fuel is a major input in most manufacturing and transportation sectors. The gussy up in the oil prices occurred in the third and fourth croupe of 1999.

Zimbabwe does produce oil, so it depended on imports, so an increase in the price on the international market as result of OPEC cartel agreements, will drastically increase prices of most goods and this is a classic example of imported inflation. Fiscal deficits Budget deficits defecate been increasing more(prenominal) rapidly since 1997 after payme nt of the war-veterans gratuities which were! not budgeted for in the national budget. This was followed by the entry into the DRC war which was estimated to cost billions of dollars for the deuce social class stay. The effect of high budget deficits as... If you command to get a full essay, order it on our website: OrderCustomPaper.com

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