Understanding the 4,500 percent inflation in Zimbabwe
By MUNGAI KIHANYA
The Sunday Nation
Nairobi,
05 August 2007
According to media
reports, the inflation rate in
Whenever percentages
go above 100, they become confusing. For example, if you earned Sh
10,000 and you were given a 150 percent pay rise, what would be your new
salary? It is tempting to say Sh 15,000, but that would be wrong. The
correct answer is actually Sh 25,000.
Not convinced? 150
percent of 10,000 is 15,000. Therefore the new salary is Sh 10,000
(original value) plus Sh15,000 (the increment), equals Sh 25,000.
Clearly, the result
after a 150 percent increment is two-and-a-half times the original
value. (25,000 = 10,000 x 2.5).
Therefore, 4,500 percent inflation means that the prices of goods will
go up to 46 times their level in one year.
Let’s put that in
proper perspective: if it was in Kenya, the price of bread, for example,
would rise from the current Sh 25 to Sh 1,150 in the next 12 months. Now
that’s bad!
But still, when
inflation is that high, people find it hard to think very far into the
future – 12 months seem like eternity. So, it becomes more useful to
quote the inflation rate for a shorter duration, say one month.
As explained in these
columns recently, the monthly inflation rate is found by asking what
number would be multiplied by itself 12 times to give a result of 46.
The answer is 1.376. Therefore,
Another way of
looking at it is to find out the doubling time; that is, how long it
takes for prices of goods to double. With 4,500 percent inflation, the
answer is 66 days! For comparison, at the current rate of 11 percent,
prices of goods in Kenya will double in 6.6 years.
***
Several readers have
asked whether animals can predict earthquakes. There is no conclusive
evidence of this. The problem is that earthquakes come unannounced and,
therefore, it is very difficult to establish which animal behaviour
means that one is on the way…after the fact.
The suggestion that
they can “hear” the low frequency waves before we feel the movement does
hold much water. The shock-waves travel through the earth at a few
kilometres per second. Sound on the hand only manages 300 metres per
second (0.3km/sec) thorough the air. Therefore, by the time the sound
arrives, the quake is long gone past. So, whatever animals detect (if
anything) is not sound.
Incidentally,
proponents of this notion quote the 1975 earthquake in China when the
authorities issued warnings a day before it struck. Unfortunately, there
is no evidence to show that the warnings given were based on animal
observations. And there were smaller tremors experienced for several
days before the big one hit.
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