via Wave of price hikes hit Zimbabwe – Nehanda Radio 3 October 2014 by Paul Nyakazeya
PRICES have started going up after a hike in fuel prices triggered by an upward review of tax on fuel by government, which is desperate to raise cash to fund a tight budget. Government increased excise duty on fuel by US$0,05 with fuel service stations immediately responding by hiking prices by up to eight cents per litre.
Excise duty on diesel was raised from US$0,25 to US$0,30, while that for petrol moved to US$0,35 from US$0,30. Petrol is now being sold at up to US$1,57 per litre, from as low as US$1,49 per litre, while diesel rose to US$1,47 from US$1,40.
Finance Minister Patrick Chinamasa also increased duty on car imports. This forced car dealers to adjust prices upwards by varying margins. He also increased tax on mobile phone airtime.
Imminent inflationary pressures on an already battered Zimbabwean economy could trigger anger as the economic condition worsens. A survey by the Financial Gazette indicated that the price of a number of grocery items had gone up in several retail outlets.
A 2kg bag of roller meal now costs US$1,80, from US$1,70, while a 5kg bag, which was retailing at US$4,10 per bag, now costs US$4,90. A bar of laundry soap now costs US$1,10 from US$1,30 before the tax hike, while the price of Colgate toothpaste (100ml) went up to US$1,05, from US$0,90. A 2kg packet of sugar now costs US$2, from US$1,80 before the fuel price hike.
Cooking oil, whose price had marginally declined over the past few months, increased after the tax announcement to US$4,00, from US$3,80 before the tax hike. Mixed fruit jam (500g) increased to US$1,79, from US$1,69. Pampers now cost US$3,40, from US$3,20. Mobile phone operators also hiked tariffs by up to five percent.
In a notice to its subscribers, the State-run NetOne said tariffs would be reviewed. “Please be advised that all call and data rates will increase by five percent from 15 November 2014 in compliance with the recent fiscal directive,” said NetOne.
It was not immediately clear by what margins Econet and Telecel, the largest and second largest mobile telecommunication firms by subscribers respectively, had increased their call tariffs in line with the new tax regime.
“Government is seeking to broaden its revenue base through collection of taxes on fringe benefits. Government has on several occasions increased duty on fuel in order to increase its revenue coffers,” said BancABC in a commentary on the midterm fiscal policy review.
“The first round impact of upward review of duty on fuel will see most service stations adjusting their fuel prices. The second round impact could be a general increase of prices of basic goods in the economy,” said BancABC.
Economists were worried that government appeared to have considered its own interests ahead of those for the country, the majority of whose population is unemployed.
Generally aggregate demand remains weak, with consumers now directing most of their spending to immediate necessities.
With the cost of living in Zimbabwe rising against stagnant salaries, most workers of 30 years and below would need to earn twice as much as they are earning to have the lifestyle their parents enjoyed at the same age. The average salary for the estimated 25 percent of the formally employed Zimbabweans is about US$400, according to experts.
The massive financial deficit is forcing young people to delay key life decisions. Low disposable incomes and the consequent drag on consumer spending power, which translated into low demand volumes, had curbed price increases on the local market. Financial Gazette
COMMENTS
Just the ‘beginning’ of the acceleration of an already downward spiralling out of control economy…hopefully the beginning of the end for the ‘looters gang’. Better must come!!
Pamberi Zimbabwe
How much more can the people take?
We have been reduced to paupers in our own country. Will this cup come to pass. The question is when? Some tin pot economists paraded by The Herald soon after Chinamasa’s mid-term policy statement were saying there would be no price increases citing Delta which had reduced prices on beer as an example. I wonder what these hair brained nicompoops would say now?
They will squeeze all the blood until water comes out. The vampires. It wouldn’t be an issue if the funds were used properly but for looting.
still zimbabwe is the cheapest in this part of the world. travel n compare.
You know wot really pissed me off? The day after the announcement that fuel prices would be going up the filling stations upped the pump price. This increase was made on fuel that had already been bought. Thievery.
Dr Grace will straighten-up everything. Now that she has vowed to keep everyone away from the president except her, we will see better decisions and answers to all our economic problems.
I have discovered that our business people are not sincere with their prices even if we factor in the high production costs they face here.Let me give you a good example-a bottle of 2 litre mazoe drink costs less in Botswana than here in Zimbabwe,when it is locally made. One day I approached a local dealer about it, he tried to justify the local high price by trying to use currency differences, which made him look like a fool when I told him that the US dollar is more valued than the Pula and the fact that retailers here have less transport mileage,therefore less transport charges as compared with Botswana which is further away.The masses should be educated to confront these unscrupulous business people with real facts to be little them to shame.