Outcry over basic goods price hikes

THE recent increase in the prices of basic commodities in Zimbabwe has irked consumers who feel the move will wipe away their meagre incomes and raise the cost of living.

The last few weeks have seen several shops including big supermarkets increasing prices of basic goods such as mealie-meal, cooking oil, sugar, meat, rice, fish and potatoes among others.

The Consumer Council of Zimbabwe (CCZ) has already raised the red flag while economic experts warn the increases could trigger inflation.

Businesses have attributed the increase to the introduction of the 15 percent VAT under Statutory Instrument (SI) 20 of 2017 on previously zero-rated products. This is despite calls for reducing prices and adoption of internal devaluation as a strategy to achieve domestic competitiveness and curb an influx of cheap imports.

A snap survey carried out by Business Chronicle in major retail outlets in Bulawayo yesterday showed that prices of basic goods have shot up.

A 2kg portion of chicken cuts costs between $7.70 and $8.00 from about $6 while a kilogramme of beef costs $5.90 from about $4. A 2kg pack of rice now costs $2.29 to $3.29 from about $1.89 while a 2 litre bottle of cooking oil costs between $3.50-$4.00 from $3 with 2kg of sugar now pegged at $2 from $1.89.  A 10 kg bag of mealie-meal now costs $6.35 from about $5.90.

The cost of living as measured by the Consumer Council of Zimbabwe's low income urban earner monthly basket for a family of six increased from the December figure of $577,97 to $590,52 by end of January 2017, showing an increase of $12,55 or 2,17 percent.

The CCZ has also linked the increase to fluctuating fuel prices on the international market.

Mr Mthandazo Dube, a taxi driver, said the price increases would frustrate economic growth as they affect spending power.

"Price increases will affect the economy and it will lead to a gradual rise in importation of basic commodities just like in 2008. The introduction of bond notes and use of plastic money created some positives in the economy because consumers were able to buy basic commodities without any hassles," he said.

Another consumer Miss Bongi Zuze said the increase in prices of basic commodities was unjustifiable as it weighs heavily on consumers' pockets.

"This thing (price increase) is frustrating in the sense that the Government should be the one which tries to keep the prices stable. At banks we are given little money and salaries are not enough to cover all the expenses," she said.

Ms Sarah Mlilo, a vendor, said it was worrying that the prices were being increased at a time when the economy was not doing well.

"There's no employment in the country so why increase prices when the majority of consumers don't work. I think something has to be done because it doesn't make sense. People should be employed formally, earn their salaries and be able to spend," she said.

ZNCC past president and Bulawayo businessman Mr Obert Sibanda said prices increases were a reaction to a combination of factors.

"Apart from the 15 percent VAT, businesses seem to have taken issue with bond notes which they blame for challenges when importing goods. So, they are trying to get around that. Indeed this will also push inflation up and stifle consumer spending," said Mr Sibanda.

"It is painful to have price increases in a dollarised economy. Even hardware shops have also increased prices of their products because they are saying they have problems as they cannot source their products directly abroad due to hard cash shortages. Unfortunately, these are some of the unintended consequences and at the end of the day it is the consumer who suffers."

Finance and Economic Development Minister Patrick Chinamasa introduced the 15 percent VAT in his 2017 budget, a move that has attracted opposition from farmers across the board, grain millers and consumers.

Some experts contend that the increase in prices might fuel smuggling of cheap consumer products, a development that might reverse the gains achieved so far under Statutory Instrument 64 of 2016, which has given local firms a new lease of life by restricting importation of products that are available locally.

The Confederation of Zimbabwe Retailers (CZR) has also warned against price increases saying those who do so were digging their own graves and risk losing business in the long term. The lobby group has said unwarranted price increases would disrupt economic progress at a time when the country is working on enhancing the ease of doing business and competitiveness.