Prices of basic commodities stabilise

The current drop in basic commodity prices was influenced by a marginal decrease of fuel prices but more has to be done to address the deep-seated currency problems in the country, sector representatives have said.

Last month, government ordered players in the petroleum industry to reduce fuel prices with immediate effect to $1,35 per litre for petrol, $1,23 per litre for diesel and $1,17 for paraffin following the reduction in excise duty.

Confederation of Zimbabwe Retailers president Denford Mutashu said fuel was just one of the cost drivers on production and it should not be treated in isolation.

"The other drivers like the cost of money, shortage of foreign currency and competitiveness issues require urgent attention. The high level of informalisation has meant indiscipline may not be wished away easily," Mutashu said.

Confederation of Zimbabwe Industries president Sifelani Jabangwe said the prices of many products had gone down by at least 4% but said currency shortages which could be addressed by the opening of the tobacco season remained a challenge.

"We are still to do a full audit on prices, but there is generally a slight downward trend in prices. From the discussion we have had, we have seen that it (price reduction) has been because of the reduction of fuel prices. The fuel reduction was just 5% and the range of price reduction is between 1-4% except for beef which has gone down by 20%.The challenge is still on currency. If the currency improves after March because of the tobacco season, we will see prices stabilising further," he said.

Retailers Association of Zimbabwe chairperson Themba Ndebele said beef prices were going down due to an uncertain rainy season which threatens cattle grazing pastures.

"Those prices of beef went up because it was Christmas time. Now it's going down because of seasonal pressures. Most people are destocking due to the depletion of grazing pastures," he said.

In November last year, government placed 16 basic commodities under a pricing and availability monitoring list to normalise macro-economic indicators.

The hedged items include cooking oil, mealie meal, bread, flour, sugar, rice, salt, chicken, eggs, beef, fresh milk, laundry soaps, washing powder, cement, fuel and energy.

Economist Tinashe Kaduwo said government must cut expenditure which has grown through the Reserve bank of Zimbabwe overdrafts and Treasury Bills.

"I haven't seen any meaningful price reductions. As long as government continues to incur huge deficits being financed from the RBZ overdraft and TBs, prices will remain sticky downwards," he said.

"To me the only way to sustainably solve the price situation is to allow the RBZ to act as a regulatory board for the government regarding public debt operations," he said, adding that an independent central bank system would keep the government in check by refusing overdrafts and issuance of sovereign paper to finance uncontrollable deficit spending.

"Instead of being driven by political heavies, the RBZ could act as the voice of reason. This implies that the RBZ would technically be in charge of regulating public debt and would therefore be in control of price levels."

Government also put in place an ad-hoc committee headed by Vice-President Constantino Chiwenga to deal with prices.

Last week, Zanu-PF spokesperson Simon Khaya Moyo said a report on prices was extensively discussed at the party's politburo meeting. He said the report reflected the multi-stakeholder engagement undertaken with industry, civil society, government and other sections of the community.