May 26 (Bloomberg) -- Vinod Rugnathji charges a shoebox full of bank notes for a pair of jeans at his general store in Mvurwi, 60 miles north of Zimbabwe's capital, Harare. He gave up counting each note when the price per jeans rose to 5 million Zimbabwe dollars ($49).

``Five million dollars fits into a shoe box so if you know the person you just trust him,'' Rugnathji, 53, said in an interview from the shop. His back office is cluttered with boxes full of cash, which he sends to the bank twice a day to deposit.

Zimbabwe's inflation rate surged to 1,043 percent in April on shortages for goods such as bread and gasoline, and John Robertson, an independent economist in Harare, forecasts inflation will accelerate to 2,000 percent by year end. Wages have failed to keep pace with prices, worsening poverty and threatening civil unrest.

Last week farm worker representatives and the Zimbabwe Congress of Trade Unions said they may call strikes and protests over pay, while on May 21 the opposition Movement for Democratic Change reiterated a threat of mass action over rising prices.

``We're getting to the point where people can't take any more,'' said Lovemore Madhuku, chairman of the lobby group, the National Constitutional Assembly. ``It's just a matter of time before inflation sparks civil disobedience. Poverty and suffering are growing by the day.''

President Robert Mugabe, 82, said in February that the state will continue to print money, fueling inflation, to prevent starvation in an economy that's in its seventh year of recession.

Shrinking Economy

``The government has shrunk the economy without shrinking its commitments,'' Robertson said in an interview. ``They are left with the option of printing money and printing will make more inflation than we have now.''

Zimbabwe's economy will probably shrink 4.7 percent this year, according to the International Monetary Fund. The country is suffering after Mugabe ordered the seizure of white-owned commercial farms for redistribution to black subsistence farmers.

The upheaval in the countryside slashed the tobacco crop to the lowest in 32 years this year. Zimbabwe was the world's second- largest exporter of top grade tobacco after Brazil just six years ago. It is now the fifth largest, producing just over a fifth of what is grew in 2000.

The resulting foreign currency shortage has led inflation to outpace the central bank's ability to print money. The Reserve Bank of Zimbabwe currently prints the biggest note of $50,000 Zimbabwe dollar over old $20 notes, which can still be seen under the ink of the new bill.

Loads of Money

``Six years ago my weekly shopping probably cost about Z$1,000 a week,'' said Sandy Macdonald, 45, a mother of two who lives in Harare's affluent Borrowdale suburb and carries a rucksack full of cash to go shopping. ``Now it costs $15 to $20 million Zimbabwe dollars, but then a jar of coffee costs a million and we're a lot more frugal nowadays.''

Inflation accelerated from 133 percent at the start of 2005 following a foreign currency shortage and after the central bank printed money to help repay debts to the IMF, which had threatened to expel Zimbabwe.

According to the central bank, the Zimbabwe dollar trades at 101,196 to the U.S. dollar. On the black market it trades at about 220,000.

Mugabe said in February that the state will keep printing money.

``Those who say printing money will cause inflation are suggesting that you just fold your hands and say 'ah, let the situation continue and let the people starve,''' he said. ``I will print money today so that people can survive.''

The central bank didn't respond to written questions from Bloomberg, while Finance Minister Herbert Murerwa declined to comment on inflation when interviewed on May 15.

Coping With Inflation

Meikles Africa Ltd.'s TM Supermarkets, the country's biggest grocery chain, has installed cash counting machines in a bid to cut down on queues.

Aphrodite, a Greek restaurant that sells dishes such as fried halloumi cheese, charges about 2 million Zimbabwe dollars for a meal for two including a glass of wine. Five years ago it charged 200 dollars.

``Customers come for meals with big bags full of money to pay,'' said Simion Kamunga, who manages the restaurant near Harare's Avondale shopping center. ``It takes a long time to count all this money, which must be kept in boxes because a cash till doesn't have enough room.''

Wages have failed to keep pace with inflation. Farm workers earn 1.3 million Zimbabwe dollars a month while the Consumer Council of Zimbabwe estimates that a family of six needs 42 million to get by, the Harare-based Zimbabwe Standard newspaper said on May 21.

A farm wage is enough to buy five liters of motor fuel on the black market or four packs of cigarettes in a shop.

``We all just wish this would end,'' John Takawira, 34, a street vendor who sells fruit in Harare's northern suburbs and can't afford to make the 35 kilometer (22 mile) journey home every day. ``Sometimes I make less than a million a day but if the police find me sleeping in town I can get beaten or arrested and if I go home without money my wife will scold me.''

To contact the reporter on this story: Antony Sguazzin in Johannesburg asguazzin@bloomberg.net

Last Updated: May 26, 2006 10:33 EDT