By Nelson Banya
HARARE (Reuters) - Zimbabwe's inflation rate jumped to a record high in September, the latest sign that President Robert Mugabe has made little progress in easing an economic crisis analysts say presents the biggest challenge to his rule.
The government's Central Statistical Office (CSO) said on Wednesday annualised inflation rose to 7,982.1 percent in September from 6,592.8 percent in August. Experts estimate it is actually much higher.
Zimbabweans, who face severe food, fuel and foreign currency shortages, can barely afford bus fares. Queues outside of stores are getting longer and many shelves are empty.
Mugabe's security forces, accused of widespread human rights abuses, are cracking down on dissent and the opposition poses few challenges.
But analysts say economic pressure is building because he has not proven to Zimbabweans that he can take control and ease their hardships.
"Although the opposition is currently weak and divided, the economic instability has also created friction within the ruling party. The political situation is very unstable as a result," said economic commentator Eric Bloch.
In one sign of growing discontent, Zimbabwe has been hit by a spate of wildcat strikes in the past month from workers demanding wages in line with the country's inflation, the highest in the world.
"We will see industrial pressures from workers over the rising cost of living," said Bloch.
Analysts expect the inflation rate to keep rising after businesses obtained government permission to start increasing some prices, which had been frozen under a controversial price blitz that Mugabe imposed in June.
"Fundamentally the increase was largely expected given the strong inflationary pressures in the economy," said David Mupamhadzi, a bank economist.
"The trend is likely to continue beyond December despite the supply side intervention (of extending concessionary loans to producers) by the central bank to improve productivity)," he told Reuters.
"FIGURES DON'T MATTER"
As the CSO was releasing inflation data, vendors and black market traders -- selling everything from vegetables, bread to scarce foreign currency -- were playing their usual hide and seek games with the police, who want them off the streets.
"The (inflation) figures don't matter, what matters is to stay alive and that's what we are trying to do here," one foreign currency trader said.
Basic goods and foodstuffs -- which were cleared in a wave of panic buying -- remain in short supply across the country.
Mugabe, 83, in power since independence from Britain in 1980, denies accusations he has ruined the economy with controversial policies such as seizing white-owned farms for blacks with little farming experience.
Mugabe also denies allegations of human rights abuses and says Western powers have sabotaged Zimbabwe's economy in retaliation for the land grabs and are plotting to oust him.
On Wednesday, central bank governor Gideon Gono said the government had provided unprecedented financial support for farmers in order to end food shortages.
"We are geared for the mother of all agricultural seasons ... the state of our preparedness for the forthcoming agriculture season could never be compared with anything we've seen over the past few years," he told reporters.
