A harsh war of words has ensued pitting American applied economics Professor Steve Hanke of The Johns Hopkins University, a global currency guru, and ZimStats Director-General Taguma Mahonde over veritability and accuracy of inflation figures in Zimbabwe.
ZimStats recently issued a scratching statement denouncing and rubbishing Hanke’s statistics with regards to the country’s inflation figures.
The country’s statistical agency went on to call Hanke a bitter man saying he wanted to be given consultancy work by the new dispensation and became angry when he was not given the job.
And Mahonde has seemingly taken over the fight.
Apparently, Hanke fiercely hit back at Mahonde after he had challenged the Purchasing Power Parity (PPP) method which the American expert uses to calculate price increases rates in different countries, including Zimbabwe.
“FLASH: A circus, amply supplied with clowns, has arrived in Harare, Zimbabwe. The lead clown is none other than the Director-General of Zimstat Taguma Mahonde. He is holding a banner: ‘Zim’s inflation = 256.9%/yr.’ SPOILER ALERT: Zim’s inflation = 479%/y,” blasted Hanke.
Stung by Hanke’s PPP theory to calculate the average rate of monthly and annual price increases – which mostly puts inflation much higher than official figures – the Zimbabwean government, through Mahonde, came out guns blazing against the US currency and inflation expert.
Mahonde says the PPP approach is wrong.
In any case, he adds, Hanke only became critical of the Zimbabwean government methods after 2018 following his alleged failure to land a multi-million-dollar consultancy that he was purportedly eyeing.
But Hanke, a leading world expert on currency boards, measuring and stopping hyperinflation, privatisation, currency and commodity trading, insists the PPP theory is a tried and tested – better – method of measuring inflation above 25% annually as is the case with Zimbabwe now.
Official measures are calculated by determining changes in prices of items in local currency in the official basket. These prices are gathered by sampling prices for items in the basket. Then, the items in the official basket are assigned weights, and a price index is produced.
Hanke is on record trying to offer Harare advice on how to bring her economy back on its feet.
He calls on Harare to address economic fundamentals as opposed to addressing the symptoms.
Meanwhile, critics have over the years blamed government for allegedly playing down inflation figures in an attempt to paint a glossy picture.