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Price Cuts Ruin Zimbabwe's Economy

Mugabe's radical 'solution' to spiraling inflation backfires

By Dustin Lushing,  Newser Staff

Posted Aug 2, 2007 10:53 AM CDT
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(Newser) – A radical attempt to curb Zimbabwe's hyper-inflation by cutting prices up to 50% has backfired on President Robert Mugabe's government, which is now teetering on the brink of collapse, the New York Times reports. Store shelves are empty; bread, sugar, and cornmeal, the staples of Zimbabwean's diet, are depleted.

Gasoline, meanwhile, is unobtainable, as manufacturing has ground to a halt and scores of workers are being laid off. Zimbabwe's economy began shrinking in 2000 because of political turmoil, capital flight, and gross mismanagement, but business says it's now near rock bottom. And the middle class, who rely mostly on retail stores, are likely to feel the brunt of the decline.

Two women walk past empty bread baskets in a supermarket in Harare, Zimbabwe Tuesday, July, 10, 2007. The move by the Zimbabwean government to reduce prices of basic commodities by more than 50 percent has seen most supermarkets left with no goods to sell. Zimbabwe's economy veered closer to the...
Two women walk past empty bread baskets in a supermarket in Harare, Zimbabwe Tuesday, July, 10, 2007. The move by the Zimbabwean government to reduce prices of basic commodities by more than 50 percent...   (Associated Press)
Robert Mugabe, the President of Zimbabwe, talks during his meeting with Egyptian President Hosni Mubarak, unseen, at the Presidential palace in Cairo, Egypt, Saturday, June 16, 2007. (AP Photo/Amr Nabil)
Robert Mugabe, the President of Zimbabwe, talks during his meeting with Egyptian President Hosni Mubarak, unseen, at the Presidential palace in Cairo, Egypt, Saturday, June 16, 2007. (AP Photo/Amr Nabil)   (Associated Press)
President Robert Mugabe at the official opening of the last session of parliament in Harare, Zimbabwe Tuesday, July, 24, 2007. Zimbabwe, who face the world's highest inflation, is set to hold presidential and parliamentary elections in March 2008.(AP Photo)
President Robert Mugabe at the official opening of the last session of parliament in Harare, Zimbabwe Tuesday, July, 24, 2007. Zimbabwe, who face the world's highest inflation, is set to hold presidential...   (Associated Press)
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inflation • Zimbabwe • Robert Mugabe • hunger • gas • middle class • US economy • shortage • hyper-inflation

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