Bread price increase will be blocked says Biti

GOVERNMENT will not allow the proposed increase in the price of bread because it will push up inflation, Finance Minister Tendai Biti has said.

He said yesterday that there was no justification for the increase.

The National Bakers Association of Zimbabwe last week said it would pass the high prices of local flour and tariffs on imported flour to consumers, unless Government reduced the duty from 20 percent to five percent.

Bakers want a loaf to cost US$1,20, up from US$1.

But Minister Biti said there had been no fundamental changes in the price and tariffs to warrant the increase.

"The statement by the bakers' association is misleading. As you are aware, there is no duty on the impor­tation of wheat," he said.

"Wheat is imported by millers who then produce flour for onward selling to bakers.

"What the bakers' association is trying to do is to push us to liberalise the importation of flour."

Minister Biti said it was irresponsi­ble for bakers to claim there was an increase in the price of flour.

"It is irresponsible to insinuate an increase in the price of wheat and import duty when duty on wheat is not there and has not been increased," he said.

"As far as we are concerned, there is nothing that justifies the rise in the price of bread and we will not accept that.

"We will not accept an appetite from a small section of business to push inflation."

Zimbabwe has maintained an inflation rate of between three and four percent since the introduction of the multi-currency regime.

Minister Biti said the price of oil was declining on the international market, ruling out fuel as a factor in the increase of the price of bread.

The Grain Millers Association of Zimbabwe echoed similar sentiments.

GMAZ chairman Mr Tafadzwa Musarara said bakers should not use flour prices as an excuse to increase bread prices.

"If the National Bakers Association of Zimbabwe wants to increase the price of bread, let it be on another basis, and not on flour," he said.

"The price of flour has not gone up. So, there is no need to increase the price, except if there are any other rea­sons such as fuel and other costs."

Mr Musarara noted that the reported drought in the United States of America affected maize and wheat harvests in that country.

As a result, he said, livestock feed manufacturers in the US had resorted to buying wheat as an alternative, pushing up demand.

"This development has seen wheat landing in Zimbabwe at a price of US$495 per metric tonne from US$440, which is a 13 percent increase," he said.

GMAZ had earlier committed to the baking industry through the National Bakers Association of Zimbabwe that the price of flour would be held at US$34 per 50kg, all variables being constant.

In a bid to avoid the bread price increase, the grain millers' association resolved to absorb eight percent and passed on only five percent increase to the price of flour.

The price of flour, in reality only increased from US$34 per 50kg to US$36 per bag, an increase of only US$2 per 50kg bag.

"This means that out of 102 loaves of bread produced from a 50kg bag of flour, the price increase is only 0,019 cents and GMAZ believes that between the bakers and the retailers, 0,019 cents can be absorbed," said Mr Musarara.

The GMAZ emphasised that the increase in the cost of flour on its own did not in any way warrant the bread price increase.

The GMAZ said it would continue to keep its commitment on the stabilisation of prices for maize-meal, rice and other staple foods.

But the National Bakers Association of Zimbabwe president Mr Dumisani Moyo insisted that the costs of pro­ducing bread had gone up.

"The price of flour has increased from between US$680 and US$690 per tonne to between US$710 and US$740 per tonne, so I am not sure of the basis of their statements," he said.

"We have been seeking to meet Government officials to show them where we are coming from and if they are saying there is no justification then that is regrettable," Mr Moyo said.