Causes Of Loread Of Bread In Zimbabwe

Dough Costs Serious Dough: Why Did Bread Cost Z$10 Million in Zimbabwe?

“One loaf of bread, please.”

“Coming up. Would you like to pay while you wait?”

“Sure.”

“That’ll be Z$10 million.”

In 2008, if a Zimbabwean wanted to purchase a loaf of bread, their experience would be similar to the one above (except maybe in the native language of Zimbabwe) – paying 10 million dollars in Zimbabwean currency. While it is tempting to attribute the expensive price to an exciting, delicious, and rare top-secret Zimbabwean recipe for a standard loaf of bread, the explanation can be found elsewhere and somewhere even more exciting: the land of Economics. When Zimbabwe became an independent nation in 1980, its annual inflation rate had been 5.4% and its monthly inflation rate had been 0.5%. The Z$20 had been the largest Zimbabwean bill and the Zimbabwean currency was used in over 95% of transactions. In 1980, a US dollar bill was only worth Z$.647. GDP had increased by 14.6% in 1980 from the previous year. In 1982, the unemployment rate stood at 10.8%. In 2008, the year of Z$10 million loaves of bread, Zimbabwe’s annual inflation rate was 231 million percent and its monthly inflation rate had been 2,600.2 %. The Z$20 bill had been replaced as the largest Zimbabwean bill by the $Z 100 trillion bill and the local Zimbabwean currency was losing its purchasing power. In 2008, Z$4 million was worth a US dollar bill. GDP had decreased by 17% and the unemployment rate stood at 94%. These economic statistics for the year 2008 reflect Zimbabwe’s period of hyperinflation, attributed to its economic crisis, a shortage of important crops in an agriculturally dependent economy, great public debt, and rampant government spending. To determine why the...

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...ingle digits.

However, while Zimbabwe’s solution did pull the nation out of its period of hyperinflation, I object and raise an alternative solution that may have been better. It is obvious that the inflation was caused by the central bank’s decision to print more money and by the government policies that allowed it to do so liberally. While hyperinflation is a rare occurrence in economic history, one method of salvation is the creation of an independent central bank. Zimbabwe should have replaced its central bank and enacted more stringent policies towards the printing of money. It is the central bank that prints money. It is the excessive printing of money that causes inflation. The problem clearly lied within the central bank and that is where the solution should have been found as well.

As for the bread, the Z$10 million dollar loaf is now off the menu.