As 2005 draws to a close the people of Zimbabwe have little to celebrate, with inflation reducing all but a small minority to abject poverty. The dramatic decline in living standards is making the daily life of most Zimbabweans miserable.

Zimbabwe's inflation has soared to more than 500 percent per year, and economists predict it could climb to twice that rate next year. No other country in southern Africa has inflation above 20 percent.

The U.N. humanitarian chief, Jan Egeland, after a brief visit recently, said Zimbabwe is in "meltdown." In his words, "the situation is very serious in Zimbabwe, when life expectancy goes from more than 60 years to just over 30." He attributed the decline to the AIDS pandemic, food insecurity and the total collapse of social services.

Zimbabwe was once a food exporter, but government policies of farm land expropriation carried out over the past five years, and one season of patchy rainfall, have left the country unable to feed itself, and millions of people in Zimbabwe now rely on food aid.

Economist and financial consultant John Richards says government spending is fueling the country's inflation. "Government spending in the year to September increased by a thousand percent. When you spend a thousand percent, you will likely get the same amount in inflation. The real economy in this country shrunk even by the government's own admission by 45 percent in the last five years. That means, government should have shrunk by 45 percent. Government has not shrunk by 45 percent. The formal economy is producing much less tax revenue, in order for it to pay its civil servants. The mismatch between revenue and expenditure means there is little option, but for government to print money to fund the budget deficit, and that will push inflation further," he said.

Rudo Chibebe is among the 20 percent of Zimbabweans with a job. She earns well above the minimum wage of one-million Zimbabwe dollars, about 13-U.S.-dollars, a month, and has free accommodation and basic food for herself and three grandchildren. She says, like many Zimbabweans who moved to big cities, she used to be able to travel to her rural home. But she can no longer afford to.

"Two years ago, we used to go home and communicate with our families and our relatives," she said. "Now, since last year, we can't afford to go home. Don't talk about school fees -- most of the children are not going next year, because it is about six-million (Zimbabwe dollars)."

That's the equivalent of about $80 at the official rate of exchange.

She says prices for food and basic goods have gone through the roof. "This year is worst, prices going up after an hour. If you go to the shops and buy a bar of soap, (then) if you meet someone on your way back home, you can't say the price, because if that person goes there, it will be about five-thousand (Zimbabwe dollars) more," she said.

Urban residents were hit particularly hard in 2005. Many had their houses and businesses demolished by the government during a winter campaign officially known as 'Drive out the Trash.'

The government of President Robert Mugabe said it bulldozed hundreds-of-thousands of homes and small businesses as part of a campaign of urban renewal. The United Nations called the program "disastrous."

John Mawire's home was knocked down, along with a room he rented to run his business as an upholsterer. As the government bulldozers closed in on his business premises, he used all his cash to transport his sewing machine and tools to safety. "So, during the operation they destroyed that place, and I have to carry my things to Mufakose, another location, just to hide my things there, pumping out some money, and by the time the operation stopped, I had no money to start working," she said.

Some economists say, if Zimbabwe has good rains this summer, and the mining industry climbs out of its doldrums, inflation could stabilize next year, and even drop.

But until then, Zimbabweans will continue to struggle with food shortages of interruption of services such as electricity and water.