Prices head north despite engagements

Source: Prices head north despite engagements – NewsDay Zimbabwe January 10, 2018

Prices have continued on an upward trajectory in the new year despite marathon meetings by the new government led by President Emmerson Mnangagwa with retailers and manufacturers aiming to curb increments.

By TATIRA ZWINOIRA

 

The price increments have been largely on basic commodities and are attributed to higher costs on the supply side. This has led to ripple effects in the meat and retail sectors, takeaways and the fast food industry, wholesalers and retailers and on consumers.

Basic commodities whose prices have gone up include baking flour, cooking oil, meat, beverages, and hygienic products, among others.

For the consumer, these increments have had the ripple effect on families as they tightened their budgets, with most not being able to enjoy last month’s festive season.

Among the basic commodities, one product that has had a huge price hike is meat.

Consumer Council of Zimbabwe (CCZ) executive director, Rosemary Siyachitema said that so high were the prices of meat now that even “kapenta (the Tanganyika sardine) was nearly the same price as beef per kilogramme”.

Prices for meat went up due to the producers increasing their mark-ups to between 30% and 40%, from a previous 10 to 15%.

Butcheries and retail shops said they had to effect the increments to recoup costs.

These hikes have led to increments of between 30 and 50% on chicken, beef, fish and pork products in butcheries and retail shops.

CCZ has been inundated with complaints from consumers that the price of beef, chicken, pork, and fish were now almost similar.

“I do not know about this environment, but when you hear of other mark-ups, they talk about 10%, 30 or 40% becomes phenomenal,” Siyachitema recently said.

In a recent NewsDay poll conducted on the paper’s Facebook page, consumers who participated in the poll expressed disdain over the meat price increments, describing them as greedy, inconsiderate, ‘skinning us alive’, sabotage, and steep, among others.

However, despite the negative reactions to the price increments, the Livestock and Meat Advisory Council’s (LMAC), in an industry report dated December 22, 2017 defended these prices.

“For livestock producers and processors, it was also a year of unprecedented challenges, accessing money and inputs at a high price, and having to contend with other procurement and operational challenges. Foot and Mouth Disease reared its ugly head and a single outbreak of Avian Influenza had a devastating impact on the poultry industry,” LMAC said.

The price increments have also affected prices in the takeaway and fast food industry.

In a snap survey conducted by the paper, prices in the takeaway and fast food industry have gone up by between 20 and 40%.

One fast food outlet where prices have increased is KFC, which imports some of the items used in making their meals.

Consumer Council of Zimbabwe executive director Rosemary Siyachitema

At one coffee shop located at an Engen Fuel station in Graniteside, Harare prices of meals have risen by an average of $1 due to the higher costs of meat and packaging.

Hospitality Association of Zimbabwe president, Innocent Manyera confirmed that prices had gone up in takeaways and fast-food outlets.

“What is happening on the ground is to do with our supply chain. Part of it is where takeaways and restaurants rely on other suppliers for products that they prepare for service. What it means is it has actually got something to do with foreign currency where prices for products differ. For example, if you buy with cash, it is United States dollars or bond notes price, if it is transfers it will be transfer price, cash on delivery it will be a cash on delivery price,” he said.

“We have got a challenge of both the forex, there is no money in the economy, the local currency that is the bond note is not even there and some suppliers are demanding cash. We actually have disparaging price of five-tier prices… so it is actually the supplier chain that will be affecting us.”

He said imports were making prices go up due to the lack of cash in the market, as well as suppliers who were demanding cash.

These price increments threaten the catering industry in that it is already seen as a luxury which could force consumers to reconsider before eating out at one of these establishments.

The ripple effect on the retail sector has also been seen, particularly, in the reduced spending from consumers.

During meetings with government just before the festivities in December 2017, retailers confirmed that sales as a result of price increments were lower and affecting the bottom line but still they could not charge less.

On why the sector has increased prices, Confederation of Zimbabwe Retailers president Denford Mutashu said it was due to “our traditional foreign currency earners like tobacco will only open its market in the following few months”.

These prices have thus led to decreased revenue for retailers and reduced spending from consumers.

Perhaps, the one group in the economy to feel the pinch of price hikes are consumers.

Consumers are already dealing with cash shortages which will get worse as banks are currently not prioritising them, as hinted at by Bankers Association of Zimbabwe president Charity Jinya just before the festive season.

Further to this, disposable income has shrunk, leaving consumers to prioritise when shopping for groceries in what otherwise they would ordinarily buy.

A number of consumers have taken to social media platforms such as Facebook and WhatsApp groups to call for a boycott on shopping from retailers, as a response to these wanton increases.

The full extent of price increments are not yet known, but economists say they are hurting the whole economic chain.