The International Monetary Fund (IMF) said on Tuesday that Zimbabwe's year-on-year inflation rate could top 100,000 per cent by the end of the year.
Last month, the government ordered prices to be cut for all goods and services and effected a price freeze after prices had risen by as much as 300 per cent within a week.
This has deepened an economic crisis, marked by severe food, fuel and foreign currency shortages as well as high unemployment.
The move led to hundreds of business people, shopkeepers and traders being arrested and fined for overcharging or failing to display prices.
Moreover, it worsened existing shortages of most basic goods such as the staple maize-meal, cooking oil, meat and sugar.
The government says the crackdown is needed to bring order in commerce and industry, and to stop what the president says is a drive by opponents to oust him through economic sabotage.
Mugabe, 83, in power since independence from Britain in 1980, denies he has run down one of Africa's most promising economies with his policies.
He says the economy is a victim of Western opponents hoping to overthrow his Zanu-PF government which has seized white-owned commercial farms, redistributing them to landless blacks.