Sharp increase in prices of basics

Prices of basic commodities have gone up over the past months, meaning that struggling consumers have to dig dipper into their pockets as the economic environment worsens.

A survey showed that a 2-litre bottle of cooking oil was now averaging $3,50 from $3,15, the price of meat increased to $4,20 per kg from $3,50, while a 20kg bag of mealie-meal now costs $11,54 from $11,35. A 500g pack of washing powder is going for $1,45 from $1,25.

A retailer who refused to be named said the price increases were supplier-driven as most suppliers were charging retailers and manufacturers according to the cost of money, which has increased over the months.

"It's now costing between 10% to 15% more to receive supplies, which means that we just have to pass it on to the customers because it's a cost to the business as well," he said.

The increase in prices comes as cash shortages have forced retailers to embrace plastic money to maintain sales.

Zimbabwe National Chamber of Commerce president Davison Norupiri said prices had increased owing to the increase in fuel prices and also the fluctuations in the rand that has been witnessed over the last few months.

He said the coming of the bond notes could not be ruled out as one of the reasons prices were going up because people had panicked due to information asymmetry.

"Some of the suppliers do not come out clear; they just increase the prices silently. The fluctuations of the rand have also led some companies to average their prices and at the end of the day, there is price increases," he said.

Consumer Council of Zimbabwe deputy executive director Rose Mpofu said: "The speculative behaviour on the market has led to some prices going up, speculation and uncertainty on the bond notes but also SI [Statutory Instrument] 64 of 2016, where certain products may now be speculated that they may be in short supply in the future. So, consumers started hoarding, hence increasing demand,thereby triggering price increases," she said.

In a bid to boost local industries, SI 64 was introduced in July and curtails the importation of 43 products as they have local equivalents.

Mpofu said consumers should shop around widely so that they can compare prices and not pay more on some products.
Confederation of Zimbabwe Retailers (CZR) Denford Mutashu said there had been reported price increases on a few product lines.

"It's reported that there has been a spat of price increases of various goods and services on the market and as CZR, we are still carrying out a substantive survey to locate the root cause. However, the price increases are not related to the impending introduction of bond notes, and neither is it a direct result of Statutory Instrument 64 of 2016," he said.

"The business community will be consistent in their calls for telegraphic transfers to be expedited. That way, it will ease the unnecessary congestion on procurement of critical raw materials and other necessities."

He said the central bank must double its efforts in resolving the current cash crisis as it had become a direct cost to business as those with readily available cash were selling it at a premium — forcing a number of businesses to pass on the cost to the consumers.

Mutashu said the local industry had taken advantage of SI 64 and increased capacity utilisation in three months, adding the price increases were short-term and a reflection of demand and supply.

He said the survey by CZR would look at, among other things, the impact on productivity of the liquidity situation to business and the unending banking queues. The survey will take a maximum of two weeks and is meant to investigate whether there has been price increases on the market, and if so, the reasons and impact thereof, Mutashu said.

He said the retail sector was only an intermediary between the manufacturers and the consumers and there was no propensity to raise prices unjustifiably in a market where competition has turned it into a jungle.

The country is facing a liquidity crisis, with some depositors sleeping in bank queues to withdraw money. The crisis has also forced banks to place daily withdrawal caps of between $50 and $100.