Zimbabwe finance minister criticizes ‘profiteering’ price hikes as new currency falls 

Source: Zimbabwe finance minister criticizes ‘profiteering’ price hikes as new currency falls | Reuters

HARARE (Reuters) – Zimbabwe’s finance minister on Wednesday accused local businesses of profiteering for linking price increases of basic goods to exchange rate movements of a new transitional currency.

Since the RTGS dollar was introduced in February, prices of staples including sugar, cooking oil and rice have risen as much as 60 percent, squeezing already hard-pressed consumers and fuelling resentment against President Emmerson Mnangagwa’s government.

The RTGS launched at 2.5 to the U.S. dollar on Feb 22 and now trades at around 4.3 on the black market.

Price changes should be determined by inflation trends, minister Mthuli Ncube said, adding that month-on-month inflation was slowing.

“It is actually bad economics to link price increases to the exchange rate. That’s not how you do it, it is profiteering,” Mthuli told reporters.

The southern African nation dumped its hyperinflation-hit local currency in 2009 and replaced it with the U.S. dollar, which has been in short supply since 2016. That has in turn driven shortages of fuel, medicines and other goods, hobbling the economy.

In February Zimbabwe scrapped a 1:1 peg between the dollar and the bond notes and electronic dollars it introduced to compensate for the hard currency shortage, merging the surrogate currencies into the RTGS dollar.

On the official market, the RTGS weakened to 3.03 per U.S. dollar on Wednesday, according to central bank data.

But some retailers in major cities have pegged their prices using the higher black market exchange rate, as well as offering discounts on U.S. dollar purchases.

Ncube, who was announcing a $400 million wage deal for public sector workers, said the treasury was monitoring price hikes but would not be drawn on whether it would impose controls.

Although trade in the RTGS is restricted, economists expect the currency to come under more pressure when Zimbabwe starts importing grain as a consequence of a devastating drought this year, likely triggering more inflation.

The year-on-year inflation rate climbed to 59.39 percent in February. Ncube has previously said annual inflation will fall to below 10 percent by year-end.

COMMENTS

WORDPRESS: 5
  • comment-avatar
    kutambura hakuperi 11 months ago

    It’s really painful right now. Commodity prices have all gone up the 2008 way leaving civil servants working for nothing other than a bag of corn meal for thick porridge. Very low moral is in work places. Nothing is actually encouraging workers are starving.

  • comment-avatar
    Morty Smith 11 months ago

    Economics 101. Price levels are related to exchange rate especially in import dependent economies. Don’t know why this person would try and pretend otherwise. He makes himself to look stupid

  • comment-avatar
    Flick 9 months ago

    For goodness sake, get the white man back to run the show. Ian Smith was right when he said “never in a thousand years”.

    • comment-avatar
      Mooonts 9 months ago

      Mate I think it’s past “bring back the white man”. That isn’t going to happen. No white person is interested in coming back anyway after they way they were manhandled anyway. Let Zimbos untangle the sh£t they’ve created. Let us watch and smile from a distance. If Zim wants to be part of the modern world, they’ll figure it out one day… Maybe next century.

  • comment-avatar
    Nyoni 9 months ago

    It’s not stupidity now it’s complete legitimate thuggery now. Plain for all to see.