Prices shoot through the roof

Source: Prices shoot through the roof – NewsDay Zimbabwe April 17, 2019

By Rutendo Matanhike/Farai Matiashe

HARD-PRESSED Zimbabweans have been hit by a new wave of price increases triggered by the plunging RTGS dollar rate on the parallel market against the United States dollar amid high inflation, effectively eroding the marginal cost of living adjustments by both government and the private sector.

Zimbabweans woke up to increases in price of bread and other commodities at a time when fuel shortages are worsening, particularly diesel ahead of the long holiday which starts tomorrow up to next Monday.

A standard loaf of bread now costs ZWL$3,50, up from ZWL$2 following a 50% hike in prices of flour and maize meal by the Grain Millers’ Association of Zimbabwe (GMAZ).

The RTGS$ is trading at 4,9 to the US$ on the parallel market, leaving bakers with no option, but to adjust prices to remain viable.

GMAZ chairperson Tafadzwa Musarara yesterday said the movement of prices was in line with new producer prices for major cash crops announced by Cabinet on Tuesday, with maize pegged at ZWL$726 per tonnes and wheat at ZWL$1 089,69.

“We welcome the recently-announced wheat and maize prices and marvel the government effort in balancing viable producer prices and affordable subsidy level,” he said in a letter addressed to the Industry and Commerce ministry.

“Consequently, we wish to advise that the following maximum recommended prices of maize meal and bakers flour shall apply effective Monday, April 15, 2019. Ten kilogramme roller meal at ZWL$10,50 at a recommended retail price of ZW$11,85 and 50kg bakers flour at ZWL$83.”

Prices of basic commodities, including soap, potatoes, syrups, fruits and cereals also shot upwards, leaving civil servants who just got salary hikes scratching their heads for answers.

A survey conducted by NewsDay yesterday showed that many retail outlets were trading a standard loaf of bread between ZWL$3,30 and ZWL$3,50, while a 10kg packet of maize meal was going for ZWL$12.

“I was surprised in the morning when I went to buy bread only to discover that it had gone up by more than a dollar to ZWL$3,50. I had thought that things were going to be fine, but it has turned out otherwise. I am calling on government to address this situation because we are suffering,” Sharon Katete, a vendor from Mabvuku, said.

Paida Mutisi said the price hikes were unbearable.

“Last week, I bought maize meal for ZWL$7 and this morning it cost ZWL$12 for 10kg. The situation is getting worse by the day because as you can see the prices have almost doubled,” he said.

Confederation of Zimbabwe Industries president Sifelani Jabangwe told NewsDay that the hikes had further devalued the local currency and that the immediate solution was for government to issue a subsidy to plug the gap caused by the hikes.

Economist Brains Muchemwa said it was inevitable for prices to go up because producers and retailers are feeling the hit of the austerity measures.

“The price of bread has for many years been subsidised by the government. The advent of austerity measures and the partial liberalisation of the exchange rate has opened up cost structures across the whole economic spectrum, including the bakeries industry,” he said.

“It was inevitable that the general price levels would rise, and should rise further until the economy corrects the imbalance that exists between huge RTGS dollar balances that were being created over the last four years without tangible productivity on the domestic economy.”

The increases fly in the face of President Emmerson Mnangagwa who last week promised to invite captains of industry to discuss the issue of prices.

Bakers’ Association of Zimbabwe president Ngoni Mazango and Industry and Commerce minister Nqobizitha Mangaliso Ndlovu were unavailable for comments.

Long fuel queues also surfaced yesterday with the shortage of diesel appearing to be getting more desperate.

On Monday, the Zimbabwe National Statistics said year-on-year inflation rate for the month of March, 2019 had spiked to 66,80% from 59,39% in the previous month after rebasing from last month.

The statistics agency, however, said under the old basing system it used until February inflation would be 166,154%. Both figures are a new high in over a decade since Zimbabwe dollarised in 2009.

Information minister Monica Mutsvangwa told a post-Cabinet briefing last night that government was concerned with the timing of the price increases, a few days before the Independence Day celebrations.

“Such a move, whether by design or otherwise, certainly has the effect of dampening the mood of the nation. Further, the unilateral action does not bode well to on-going efforts by government to engage in dialogue with all stakeholders, business included, with a view to creating a stable environment where businesses can compete and thrive,” Mutsvangwa said.

“Cabinet, therefore, calls on the Bakers’ Association of Zimbabwe to defer the planned hike in prices of bread in order to allow for the normal mutual consultations to take place.”

On fuel, Mutsvangwa said Energy minister Joram Gumbo informed Cabinet that measures have been taken to ensure that there will be adequate fuel supply in the country over the Easter and Independence Day holidays as well as during the 2019 Zimbabwe International Trade Fair.

“An additional 20 million litres of fuel, comprising eight million litres of petrol and 12 million litres of diesel have been released into the market and is being uplifted since last night,” she said.