Fuel price hike sparks mayhem

THE recent increase in the prices of fuel has triggered a massive hike in the prices of most basic commodities.

The Zimbabwe Energy Regulatory Authority on Wednesday increased fuel prices for the second time in five days, with petrol going up from US$1,51 per litre to US$1,67 and diesel from US$1,51 per litre to US$1,68.

Confederation of Zimbabwe Retailers president Denford Mutashu implored government to focus on internal alternatives through sourcing and production to curtail the negative economic reflex effect triggered by the Russo-Ukraine war.

"We should brace for price increases on basic and non-essential products as the global geopolitics play out triggered by the Russia-Ukraine war. It is high time we focus on internal alternatives through domestic sourcing and production. Prices of fuel and gas are set to remain unstable for the unforeseeable future although there is relief from the intervention of the Arab world that has committed to increase production and supply of crude oil."

This came as Grain Millers Association of Zimbabwe (GMAZ) chairperson Tafadzwa Musarara announced increases in bread and mealie-meal prices in response to increases in the prices of maize and flour.

Musarara said the price of maize increased from $43 000 to $50 000 per metric tonne, while the flour price also went up by 14,74% to $136 544 per metric tonne.

"The maize meal retail price for 10kg roller meal will increase by 15% from $955 to $1 099.

"Bread flour will move up by 14,74% from $119 000 to $136 544 per metric tonne," Musarara said.

He said the surge in fuel prices had impacted their operating costs.

Musarara said the wheat landing price had surged from US$475 to US$675.

"The upward trend was anticipated to continue on the back of the disturbances in east Europe. Wheat constitutes 30% to 42% of the cost of bread.

"The government-sponsored wheat farming programmes have recorded the highest yield since the commencement of wheat farming in Zimbabwe. However, the war in Ukraine has greatly affected dynamics, leading to the price increases," Musarara said.

The country is currently consuming 16 000 metric tonnes of bread flour monthly, and approximately 1,2 million loaves a day.

Demand for bread is expected to increase as aggregate demand improves, owing to the removal of COVID-19-induced lockdowns.

"The 2021 local winter wheat harvest saved the country US$146 million. This proves to be a profitable import substitution transaction. However, the country will need to import 155 000 metric tonnes of wheat to mitigate the variance between local production and national demand," he said.

Confederation of Zimbabwe Industries president Kurai Matsheza said the increase in food prices was a serious cause for concern.

"This is not good for our economy. Fuel touches every sector, therefore, there will be inflation because of these exogenous factors coming so early in the year. The forecast year end numbers (inflation, gross domestic product (GDP) growth) are almost certain to be missed. The increase in fuel prices will trigger a cycle of price increases across all products and services. The disinflation we were experiencing will certainly be reversed. Food price increases are a worry for all. Wage demands will intensify and poverty levels will increase. 2022 looks certain to be bad for all of us."

Former finance minister Tendai Biti said:  "The price hikes will have a drastic impact on consumers and will erode their finances."