Zimbabwe inflation rockets to 11.27 million percent

A Zimbabwean holds a newly issued fifty million dollar note at a street traders stand in the capital Harare, April 4, 2008.

HARARE (Reuters) - Zimbabwe's annual inflation, already the highest in the world, jumped to 11.27 million percent in June from 2.2 million the previous month, the Central Statistical Office (CSO) said on Tuesday.

The latest inflation figure shows the economic turmoil -- Zimbabwe is already suffering chronic shortages of food and fuel -- is worsening with no signs that the country's rival parties will reach a power-sharing deal to end the crisis.

The CSO also said in a statement sent to banks that month-on-month inflation accelerated to 839.3 percent from 433.4 percent the previous month.

But economists believe the actual inflation figure is higher than the official figures.

"Our inflation figures are way above that but what it tells us is that the productive base of the economy has really shrunk. We really need to change the way we do business," said an economist at a domestic bank who declined to be named.

He said the core problem was that Zimbabwe's manufacturing sector had ground to a halt and money supply was at very high levels.

Critics have accused President Robert Mugabe's government of printing money to finance an election campaign and prop up the economy, fuelling hyper-inflation.

"What is needed is significant inflows of foreign currency, policy consistency and structural reforms in the energy sector," the economist said.

Zimbabwe is suffering from almost 80 percent unemployment and many of its people survive by bartering goods. The staple maize, sugar and other basic foodstuffs are in short supply.

The central bank re-denominated the Zimbabwean dollar currency on July 30 by slashing 10 zeros but this has had no effect on stemming the devaluation of the currency.

When it was re-denominated the Zimbabwean dollar was trading at Z$140 billion to the U.S. dollar, or Z$14 in the re-denominated currency. Currently the unit trades at Z$100 to the greenback, or Z$1 trillion in the old currency.

(Reporting by Nelson Banya; Writing by Marius Bosch; Editing by Victoria Main)