Zimbabwe inflation will drive out Mugabe -US envoy

LONDON, June 22 (Reuters) Zimbabwe's galloping inflation will force President Robert Mugabe from office before the end of the year, the United States ambassador to Harare said today, predicting the rate could hurdle 1 million percent within months.

In an interview with the Guardian newspaper, Christopher Dell said Mugabe's government was effectively ''committing regime change on itself''.

The southern African country has the world's highest rate of inflation at above 3,700 per cent. Eight successive years of recession have left four in five people without jobs and many struggle to feed their families.

''I believe inflation will hit 1.5 million per cent by the end of 2007, if not before,'' Dell said. ''I know that sounds stratospheric but, looking at the way things are going, I believe it is a modest forecast.'' Dell said prices were going up twice a day and sometimes doubling several times a week, destabilising everything.

International Monetary Fund Africa Director Abdoulaye Bio-Tchane said in March that he expected inflation in Zimbabwe to top 5,000 percent by the end of this year. The IMF and other key Western donors, including the World Bank, suspended aid to Zimbabwe more than six years ago over Mugabe's policies, which are blamed for the economic meltdown.

Mugabe denies charges he has mismanaged the economy during his 27-year rule and accuses Western countries of sabotage to punish his government for seizing white-owned farms for blacks.

''People have completely lost faith in the currency and that means they have lost faith in the government that issues it,'' said Dell, who is close to the end of his posting to Zimbabwe.

''Things have reached a critical point. I believe the excitement will come in a matter of months, if not weeks. The Mugabe government is reaching end game, it is running out of options,'' he said.

The Guardian recounted stories from Harare factory workers who said they saved on food and transport costs by going to work on Monday and sleeping there until today, sharing their meals.

One Zimbabwean was recently told by a pension company that it would no longer send him statements as his fund was worth less than the price of a stamp, the newspaper said.

Zimbabwe's escalating economic and political crisis has refocused international attention on Mugabe's policies.

He stands accused of a brutal crackdown against opposition politicians as well as policies that have led to soaring poverty and chronic shortages of food, fuel and foreign currency.

REUTERS KK RK1410