Source: Price madness continues – NewsDay Zimbabwe April 29, 2019
BY DESMOND CHINGARANDE
PRICES of goods and services have continued to gallop away with another massive hike effected at the weekend as retailers seek to cushion their businesses against runaway inflation and foreign currency shortages.
This comes hardly a fortnight after government threatened to introduce price controls as part of measures to tame the price madness and protect hard-pressed Zimbabwean consumers, but the retail sector has warned that price controls would trigger massive shortages of goods on the market.
A survey conducted by NewsDay yesterday revealed a new wave of price hikes of most basic commodities with a two-litre bottle of cooking oil now selling at between $13 and $15, up from about $11, two litres of Mazoe orange crush jumped from $8,50 to $13, two kg of rice from $7,50 to $9, while a kg of salt is now $2,15 from $1,90.
Beverage manufacturer, Delta Corporation has also increased the prices of beer by at least 20% just after a 25% increase of the commodity two months ago.
The wholesale prices of clear beer increased from $2 to $3 per pint.
Brown quarts in most liquor shops are being sold at $7 to $8 from $5, while green bottle quarts are selling at $9 to $12. The wholesale prices of opaque beer have also gone up with Chibuku Super now $3 and Scud $2.
Prices of basic commodities have increased by about 200% since October last year after the Reserve Bank of Zimbabwe governor John Mangudya separated bond note and foreign currency accounts. Prices jumped up again in February as Mangudya’s monetary policy statement devalued the official exchange rate from 1:1 to 1:2,5.
Confederation of Zimbabwe Retailers president Denford Mutashu yesterday said the increases were necessitated by some suppliers who were now demanding cash on delivery.
“The increases are suffocating the consumers who are hapless under the current situation. It is, however, a chicken and egg situation as suppliers have been increasing prices into the sector at a faster pace, citing rising costs. Some suppliers are demanding payment in cash or United States dollars, which pushes sector players to the parallel market,” Mutashu said.
“Trading terms have shifted drastically and more are on cash on delivery and moved from extended payment terms like a week (7 days), fortnight (14 days) and a month (30 days), citing changing operating environment anchored on one’s ability to source cheaper foreign currency. The economy is dangerously dependent on the US$ availability in most sectors.”
Information deputy minister Energy Mutodi last night told NewsDay that the issue will be discussed in Cabinet tomorrow.
“Cabinet will discuss the issue of wanton price increases this Tuesday and a solution will be found. Certainly, we cannot have a market where speculators hike prices unnecessarily. We want some discipline in the retail sector. However, in the meantime, we are saying no to parallel market exchange rate-driven inflation. Those bent on increasing prices basing on the parallel market rates are economic saboteurs,” Mutodi said.
“We do not have a budget deficit as we speak. Now we have a problem with the RTGS$ and US dollar supply ratio and we have noticed that once the US dollar supply subsides on the market, speculators increase the exchange rate by offering more RTGS dollars for one US dollar. Our people prefer US dollars even for domestic transactions and for locally-made goods. This is what we will discuss and see if we can come up with measures to curtail the increasing pressure on foreign currency and the business of escalating prices based on speculative US/RTGS dollar exchange rate movements,” he added.
Confederation of Zimbabwe Industries president Sifelani Jabangwe told our sister paper, Zimbabwe Independent last week that the price increases battering the economy were a reflection of toxic policies being pursued by government.
“The main issue that you should note is that these prices are a reflection of policies on the ground. Volumes are going down, margins are going down, there is an increase in product costs and there is no money at the inter-bank market. If you don’t increase prices, there is no way you will be able to restock. There is also resistance on the currency market, liquidity is getting less and less, so exporters are scaling down as rates are increasing on the black market,” he said.
Following the latest price increases, many are expecting the cost of living to shoot up. In a report late last year, the Consumer Council of Zimbabwe (CCZ) conceded that the family food basket had increased, but said most prices being charged by retailers were not justified.
Efforts to contact CCZ executive director Rosemary Siyachitema over the latest wave of price increases were futile as her mobile number was not reachable.
President Emmerson Mnangagwa recently told a Zanu PF youth meeting that his government would not hesitate to introduce price controls to protect the citizens against profiteering businesses. Business immediately warned that such a move would trigger shortages, especially of foodstuff.
Zimbabwe Congress of Trade Union president Peter Mutasa yesterday said: “It’s sad that the alliance between government and business that is pushing us deep into crony capitalism is seriously affecting all workers.”
“Most working men and women are now vulnerable, with the majority now in abject poverty, failing to provide food for their families. Many are failing to pay rent, school fees, medical care, clothing and other basic needs. A lot of workers are walking to work, while most families are food insecure.”
The trade unionist said medical aid schemes have been rendered useless with workers being asked to top up as high as US$400 in case of emergencies where one is requiring to be admitted overnight.
“Most workers have resorted to unorthodox medical procedures endangering their lives, while many more are left to die. The average salary is US$60 against a poverty datum line that is believed to be around US$600.
“As schools open, many kids are going to drop out because parents can’t afford fees and uniforms that are now beyond the reach of the working class majority. The situation is dire and there is need for an urgent intervention.”