News / National
Prices of basic commodities skyrocket
26 May 2019 at 13:51hrs | Views
THE Consumer Council of Zimbabwe (CCZ) expects prices of basic commodities and services to skyrocket following the near 50% increase in fuel prices last Tuesday.
"In the costing models that have been done in the past, fuel has always caused an increase though not major, but depending on what type of business you are running it has a cost build-up in the cost structures," CCZ chairman Philip Bvumbe told Standardbusiness.
Last week, the Reserve Bank of Zimbabwe cancelled fuel subsidies and instructed oil operators to source their foreign currency from the interbank market.
This resulted in a near 34% jump in the forex rates on the interbank market and later a 50% increase in the price of fuel.
As such, the pump price per litre of diesel and petrol sold rose nearly 51,9% to RTGS$4,89 and 48% to RTGS$4,97, respectively, compared to last Monday
prices.
In a snap survey to gauge the cost of basic commodities conducted by Standardbusiness, prices of selected goods were now significantly higher than what they were in the first week of the month.
At TM Pick N Pay, OK Zimbabwe and Spar Zimbabwe stores in Harare's central business district, prices of margarine had gone up by 36,93% to an average of
RTGS$8,75; 8% to RTGS$5,28 for 2kg of brown sugar and 115,2% to RTGS$2,69 for a 125 gram packet of tea leaves.
Cooking oil was up 7,41% to an average of RTGS$14,49; 17,12% to RTGS$7,32 for a 2kg pack of rice, 161,08% to RTGS$4,83 for a kg of tomatoes, 262,7% to RTGS$6,71 per kg of onions, and 10,05% to RTGS$2,19 for bathing soap.
There were also increases in the prices of washing powder of 10% to an average of RTGS$14,66 per kg and 12% to RTGS$3,64 for a bar of laundry soap.
"It is tight. Most families are now living on one meal a day, even less than one meal a day.
"When you look at the austerity measures that were put in place, are there social safety nets for the ordinary person, for the poor person who is suffering on the road?" Bvumbe asked.
"There are no social safety nets that were put in place to ensure that basic commodities are then affordable to the ordinary person.
"The government needs to put social safety nets to ensure those who are not even affording a meal a day can get something to eat, which is a basic human rights issue."
According to industry insiders, manufacturers are currently in the process of including the near 50% increase in fuel in their costing structures, which will result in further price increases.
"It is normal that they do that, rational actually. It differs from manufacturer to manufacturer because some do not have wider networks of distribution of the product so in those cases there are fewer costs in transport.
"But, those who have large distribution networks like those in the baking industry have a higher transport cost," the industry insider, who asked to remain anonymous, said.
"For retailers, they have already implemented the fuel cost into their pricing."
Labour and Economic Development Research Institute of Zimbabwe director Godfrey Kanyenze said his organisation was working on a paper to analyse the impact
of the fuel price increases.
"Fuel increases cascade to the rest of the economy because of the linkages," he said.
"Even government itself has admitted, like I think Finance permanent secretary ministry, George Guvamatanga indicated that they were now using the social
protection framework through the reduction in the fuel duty."
Kanyeze, however, warned that the government intervention did not go far to protect consumers against price increases.
"It is already clear that the consumer is the biggest loser because already inflation is going up and the consumer has already lost," he said.
"Income is lagging behind price adjustments and it is already clear also that this (fuel price increase) is going to exacerbate an already difficult situation for the consumer."
Apart from the prices of basic commodities increasing, transport fares had also increased.
According to the Greater Harare Association of Commuter Omnibus Operators (Ghacoo), transport fares are pegged at RTGS$2,50 per 10km travelled, RTGS$3 per 20km and RTGS$3,50 for 30km.
However, Ghacoo secretary-eneral Ngoni Katsvairo said the fares were too low as they could not break even.
He said they needed to charge RTGS$3,20 per 10km, RTGS$5,50 per 20km and RTGS$8 per 30km for them to remain viable.
"The increase in fares is basically informed by the 50% increase in fuel prices, which happened recently, and also the rates that are going up in terms of foreign currency," Katsvairo said.
"We buy all our spares using United States dollars as there is no shop that is taking bond notes."
Katsvairo said fuel costs represented 30% of their expenses and spare parts took 40%.
"In the costing models that have been done in the past, fuel has always caused an increase though not major, but depending on what type of business you are running it has a cost build-up in the cost structures," CCZ chairman Philip Bvumbe told Standardbusiness.
Last week, the Reserve Bank of Zimbabwe cancelled fuel subsidies and instructed oil operators to source their foreign currency from the interbank market.
This resulted in a near 34% jump in the forex rates on the interbank market and later a 50% increase in the price of fuel.
As such, the pump price per litre of diesel and petrol sold rose nearly 51,9% to RTGS$4,89 and 48% to RTGS$4,97, respectively, compared to last Monday
prices.
In a snap survey to gauge the cost of basic commodities conducted by Standardbusiness, prices of selected goods were now significantly higher than what they were in the first week of the month.
At TM Pick N Pay, OK Zimbabwe and Spar Zimbabwe stores in Harare's central business district, prices of margarine had gone up by 36,93% to an average of
RTGS$8,75; 8% to RTGS$5,28 for 2kg of brown sugar and 115,2% to RTGS$2,69 for a 125 gram packet of tea leaves.
Cooking oil was up 7,41% to an average of RTGS$14,49; 17,12% to RTGS$7,32 for a 2kg pack of rice, 161,08% to RTGS$4,83 for a kg of tomatoes, 262,7% to RTGS$6,71 per kg of onions, and 10,05% to RTGS$2,19 for bathing soap.
There were also increases in the prices of washing powder of 10% to an average of RTGS$14,66 per kg and 12% to RTGS$3,64 for a bar of laundry soap.
"It is tight. Most families are now living on one meal a day, even less than one meal a day.
"When you look at the austerity measures that were put in place, are there social safety nets for the ordinary person, for the poor person who is suffering on the road?" Bvumbe asked.
"There are no social safety nets that were put in place to ensure that basic commodities are then affordable to the ordinary person.
"The government needs to put social safety nets to ensure those who are not even affording a meal a day can get something to eat, which is a basic human rights issue."
According to industry insiders, manufacturers are currently in the process of including the near 50% increase in fuel in their costing structures, which will result in further price increases.
"It is normal that they do that, rational actually. It differs from manufacturer to manufacturer because some do not have wider networks of distribution of the product so in those cases there are fewer costs in transport.
"But, those who have large distribution networks like those in the baking industry have a higher transport cost," the industry insider, who asked to remain anonymous, said.
"For retailers, they have already implemented the fuel cost into their pricing."
Labour and Economic Development Research Institute of Zimbabwe director Godfrey Kanyenze said his organisation was working on a paper to analyse the impact
of the fuel price increases.
"Fuel increases cascade to the rest of the economy because of the linkages," he said.
"Even government itself has admitted, like I think Finance permanent secretary ministry, George Guvamatanga indicated that they were now using the social
protection framework through the reduction in the fuel duty."
Kanyeze, however, warned that the government intervention did not go far to protect consumers against price increases.
"It is already clear that the consumer is the biggest loser because already inflation is going up and the consumer has already lost," he said.
"Income is lagging behind price adjustments and it is already clear also that this (fuel price increase) is going to exacerbate an already difficult situation for the consumer."
Apart from the prices of basic commodities increasing, transport fares had also increased.
According to the Greater Harare Association of Commuter Omnibus Operators (Ghacoo), transport fares are pegged at RTGS$2,50 per 10km travelled, RTGS$3 per 20km and RTGS$3,50 for 30km.
However, Ghacoo secretary-eneral Ngoni Katsvairo said the fares were too low as they could not break even.
He said they needed to charge RTGS$3,20 per 10km, RTGS$5,50 per 20km and RTGS$8 per 30km for them to remain viable.
"The increase in fares is basically informed by the 50% increase in fuel prices, which happened recently, and also the rates that are going up in terms of foreign currency," Katsvairo said.
"We buy all our spares using United States dollars as there is no shop that is taking bond notes."
Katsvairo said fuel costs represented 30% of their expenses and spare parts took 40%.
Source - the standard
