Zimbabwe’s inflation soared to a record high of 26,470.8 percent as the economy contracted by 6 percent, the central bank said — dealing a blow to President Robert Mugabe’s government ahead of March general elections. The veteran leader will seek another five-year term on March 29, against the backdrop of an economic meltdown widely blamed on his skewed political and economic policies.

Reserve Bank of Zimbabwe Gideon Gono said inflation galloped to 26,470.8 percent year-on-year in November, 2007, from 7,982.1 percent in September. There were no inflation data for October.

The jump in inflation prompted the central bank to increase interest rates to 1,200 percent from 975 percent.

“The continued threat of high inflation warrants that interest rates be periodically realigned to discourage speculative borrowing and inflationary credit expansion,” Gono said in a statement.

“The economy is estimated to have declined by about 6 percent in 2007. This contraction in economic activity has been mirrored in output decline in all sectors of the economy with the exception of a marginal increase in agricultural output,” he added.

Zimbabweans have over the last eight years or so grappled with chronic shortages of food, fuel, foreign currency and more recently water and electricity in a crisis many say has its roots in Mugabe’s controversial seizure of white-owned commercial farms.

They say the haphazard implementation of the programme has left what was once southern Africa’s bread basket struggling to feed itself since 2002.

In his statement, Gono said the Reserve Bank had imported food worth $142.2 million in 2007, up from $114.2 million the previous year, to bridge gaps from domestic output.

Mugabe denies responsibility for Zimbabwe’s crisis, and in turn accuses Western opponents of his land reforms of sabotaging the economy - Reuters

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