The cost of living doubled in Zimbabwe last month, lifting the annual rate of inflation above 3,700 per cent, a stark sign of the economic turmoil blamed on government policies. Prices of food – which make up one third of the consumer basket used to calculate inflation – domestic power, fuel and public transport fares contributed to the steep rise, according to Zimbabwe’s Central Statistical Office.

Economists forecast that inflation will continue to spiral out of control. Tony Hawkins, an independent economist in Harare, said: “It will be well above 10,000 per cent by the end of the year, probably nearer 15,000 per cent.”

The latest inflation figures were published a week late and hidden away on the inside pages of the state-controlled Herald newspaper.

A single brick now costs what ten years ago would have bought a mansion in the capital’s upmarket areas. This week the cost of postage stamps went up 600 per cent. In the confusion over the value of anything, two cans of baked beans and a bottle of beer will also provide three months’ subscription to the Harare Club, the city’s elite gentlemen’s club that has reciprocity with most of London’s main clubs.

Last month Nicholas Goche, the Minister of Labour, admitted that he paid workers on the farm he seized from white farmers, the sum of Zim$10,000 (£20) a month, the same as one copy of The Herald.

President Mugabe, who holds an economics degree from London University and maintains that printing money keeps prices down, added a new weapon to his quixotic war with inflation this week, and signed laws to establish an Incomes and Pricing Commission. It will have sole right to set charges for the hundreds of price-controlled items, and establish profit margins. Anyone who violates the fixed prices can be jailed for up to five years.

In the past eight years of accelerating economic chaos, price controls have become a main cause of inflation, forcing manufacturers to go out of business or stop production because of the unworkable prices imposed, and making goods available only on the far dearer black market. “It is going to create some kind of price freeze,” said Mr Hawkins. “There will be shortages all over, and manufacturers will find they cannot produce.”

With the announcement of the new inflation figures, the illegal “parallel” rate of exchange – the mark generally used by business in the country – soared yesterday to Zim $70,000 to the pound. At the beginning of the year it stood at Zim$7,000 to the pound.

Mr Mugabe, Zimbabwe’s sole ruler since independence in 1980, blames Western sanctions for the state of the economy. The country faces food shortages this year after a deficit of the staple maize crop. This week officials cautioned of bread shortages because wheat growers had so far planted only 10 per cent of their targets.

Times Recommends

• Plan for 9/11 trial in New York divides the city
• Beijing gets the jitters as Obama flies in
• Potshot Palin settles scores