Crunch meeting on basic goods prices  - Zimbabwe Situation

Crunch meeting on basic goods prices 

Source: Crunch meeting on basic goods prices | The Sunday Mail March 31, 2019

Crunch meeting on basic goods prices

Kuda Bwititi
Chief Reporter

Taming prices of basic commodities will be the major talking point when Government meets industry tomorrow to discuss how implementation of the fuel rebate system, which was effected on March 22, will benefit consumers.

The rebates for excise duty on fuel effectively guarantee refunds for businesses in the productive sectors of the economy — manufacturing, agriculture, mining and transport — for the extra cost they incurred after the new prices became effective on January 13.

Industry believes the effective implementation of the rebate system will enable them to downwardly adjust prices.

Industry and Commerce Minister Mangaliso Ndlovu told The Sunday Mail that tomorrow’s meeting will also discuss challenges faced by manufacturers.

“When we put a rebate, the whole idea was to provide relief to the customer and the people, not to business. That relief is through affordable prices, and that was our expectation.

“We are going to have a meeting with industry on how this impacts on their cost structures and result in price reductions for ordinary people,” he said.

Although Government was mooting the idea of “People’s Shops”, he said, it remained conscious not to “intervene too much in the market”.

Accordingly, authorities continue to assess conditions in the market.

“We were planning on having People’s Shops that would be supported by bonded warehouses to mitigate the escalating prices.

“We want to see if in the next few weeks there is really need to still have them. There are still some pricing distortions and we are worried about the private sector profiteering out of all this, and we wanted to come up with a mitigatory measure, but we also didn’t want to upset the market.”

Price increases heightened last year owing to the mismatch between the pegged official exchange rate of 1:1 and parallel market rates.

Reserve Bank of Zimbabwe (RBZ), however, introduced the interbank foreign-exchange market in February this year.

Government, Minister Ndlovu said, will continue to monitor foreign-currency trading “and how it affects pricing of goods”.

Oil Expressers Association president Mr Busisa Moyo, who is also the chief executive officer of edible oil producers United Refiners, said if the rebate system is fully implemented, the cost of cooking oil should go down by 4 percent.

“Fuel represents 5 to 8 percent of costs of most business if you look at the logistics in and out. So a 3 to 4 percent decrease would be the impact of the rebate.

“However, it is up to Government to pay for the rebate in full and on time.”

The country’s biggest business lobby group, Confederation of Zimbabwe Industries (CZI), said tomorrow’s meeting should “thrash out key issues”.

“There will be many issues on the table. We are going to discuss the current state of industry and some of the issues that need attention include a review of the interbank foreign-exchange system. We will also discuss the rebate system and work out how it is going to be implemented,” said CZI president Sifelani Jabangwe.

Confederation of Zimbabwe Retailers (CZR) president Mr Denford Mutashu noted that retailers are likely to take a cue from industry if they review their prices.

“From the cost of basic commodities, rentals, transport, housing, school fees, there is need for a national review mechanism as incomes have been outpaced by price increases,” said Mr Mutashu.

He indicated that some predatory retailers had signalled an intention to further raise prices citing developments on the interbank market, where the RTGS dollar is now trading 3:1 to the US, despite the fact that obtaining prices already reflect the parallel market exchange rate.

 

COMMENTS

WORDPRESS: 1
  • comment-avatar
    ace mukadota 7 months ago

    ZW stop trying to control the market – no country on the planet has ever been able to rig the market price indefinitely.

    In due course the market price will whipsaw and expose the ZANUPF price rigging by even higher prices. Those prices are all prices – be it cost of USD or shoes or tubes or HIV medicines or mielie cobs – all will vault higher as the market realises the RTGS is worth very little to nothing in the future – once again Greshams law has been proved !