Speaking of a financial crisis: Zimbabwe inflation hits 231,000,000% per year as coalition talks stumble.

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Speaking of a financial crisis: Zimbabwe inflation hits 231,000,000% per year as coalition talks stumble

Even with the credit crunch striking all corners of the globe, few countries are in as dire financial trouble as Zimbabwe.

The country's annual inflation hit a record 231 million per cent and prospects for rescuing the ruined economy dimmed yesterday after the opposition said no progress had been made on forming a power-sharing cabinet.

Opposition leader Morgan Tsvangirai said he had made compromises on many issues but both sides remained divided on sharing ministries. He was nonetheless still hopeful of eventual agreement.

Up we go: A man holds a wad of Zimbabwe dollar notes in Harare, Zimbabwe yesterday as inflation soared to a new record high of 231million%

'We are part of this deal and very confident about this deal. There is nothing wrong with the deal, but in the process of implementing the deal we have reached an impasse, not on the fundamental points of the deal,' he told a news conference.

'It's ridiculous to say the deal has broken down because of this failure to agree on posts. Having a good agreement with a bad guy (Mugabe) is always something else.

Tsvangirai, leader of the Movement for Democratic Change, spoke hours after record inflation figures were issued. The yearly inflation figure raced to 231 million percent in July from 11.2 million percent in June.

A loaf of bread which cost 500 Zimbabwean dollars when the central bank redenominated the Zimbabwe dollar on August 1, now goes for at least Z$7,000.

Hyperinflation: Zimbabweans shop in a supermaket in Harare, Zimbabwe, where prices are marked in U.S.dollars

Many Zimbabweans have resorted to bartering goods and rely on help from relatives abroad, mostly in South Africa, for supplies of scant basic foodstuffs like maize, sugar and cooking oil.

World Food Program spokesman Mustapha Darboe said: 'Millions of Zimbabweans have already run out of food or are surviving on just one meal a day and the crisis is going to get much worse in the coming months.

Central Statistical Office data showed that on a monthly basis, prices in July shot up by 2,600 per cent, largely driven by high prices of bread and cereals.

An outline agreement signed on September 15 has stalled over the most important cabinet posts, angering Zimbabweans who have had to endure the world's fastest price rises, shortages of food, foreign currency and crumbling infrastructure.

Both sides accuse each other of jeopardising the process. Deadlock: Former South African president Thabo Mbeki, top left, has been called in again to help mediate between Robert Mugabe, top right, and Morgan Tsvangirai, below

 Talks: Opposition leader and prime minister designate Morgan Tsvangirai. 'What is baffling is that the political players seem to take a cavalier attitude over the political crisis whose resolution is tied to the economic turnaround,' said Eldred Masunungure, a political science lecturer at University of Zimbabwe The consequences of such a rate of inflation is absolute desperation, despair and poverty. The politicians don't seem to realise that what they do or don't do has an effect on the economy.

Former South African President Thabo Mbeki will travel to Zimbabwe to continue his mediation, said Tsvangirai.

Questions were raised over Mbeki's ability to broker a cabinet deal after South Africa's ruling ANC ousted him.

Tsvangirai said his MDC party had also contacted the African Union (AU) and regional grouping SADC over the stalemate and expressed confidence they will seek a speedy resolution.

Kenyan Prime Minister Raila Odinga, a fierce Mugabe critic, accused the Zimbabwean leader of dragging the continent's name through the mud and expressed little faith in African mediation.

'We should not be surprised at the AU's failure to stand up for democracy. Many of our national leaders have skeletons rattling loudly in their cupboards,' he said in a speech in Lagos.