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Zimbabwe price spikes spook consumers

by Staff reporter
26 Apr 2023 at 06:35hrs | Views
A NEW wave of price hikes, triggered by the plummeting local currency on the parallel market, has thrown many consumers off balance.

As of yesterday, the local currency was trading between $1 800 and $2 100 to the greenback on the black market against the official rate of $1 021.

The majority of workers earn in local currency, which they have to sell on the black market to obtain the greenback to make purchases.

The US dollar is hardly available on the official market.

A snap survey by NewsDay yesterday revealed that prices of basic commodities have significantly shot up since the weekend, with retailers pegging their products at double the official exchange rate.

A 2kg packet of brown sugar is now retailing for $4 264 (US$3, 28) from $3 280, while a standard loaf is now pegged at $1 430 (US$1,10) from $1 200 and a 2kg packet of rice is now costing $11 199 from $6 199.

A 1kg packet of Cremora powdered milk is now $6 000 (US$4,60) from $4 600; 2 litres of Mazoe juice is now $5 100 (US$3,90) from $3 900, while a 2-litre cooking oil bottle is now costing $5 850 (US$4,50) from $4 500.

A 10kg bag of mealie meal was selling for almost $10 000 (US$7,6) from $7 600.

Zimbabwe Congress of Trade Unions secretary-general Japhet Moyo told NewsDay that workers were in "trouble" because their salaries could no longer match the galloping prices.

"The salary that is coming in RTGS is wiped away," Moyo said.

"For instance, the $90 000 you were getting last week as your pay, you were able to pick maybe six items at a supermarket now you can't get the same products.

"The worker is in hard times."

Amalgamated Rural Teachers Union of Zimbabwe leader Obert Masaraure said workers deserved US dollar salaries to make ends meet.

"To protect the workers and the majority of our working people, the economy should be fully dollarised," Masaraure said.

Teachers are demanding US$1 260.

At present, they are earning US$250 on top of their local salary component of at least $160 000 to $200 000.

"The local currency is only being used to steal from hardworking workers, but the elite are transacting in US dollars.

"The local currency is being maintained to punish workers. Workers are demand US dollar salaries," Masaraure said.

National Consumer Rights Association spokesperson Effie Ncube said the local currency should be abandoned.

"For a country that is importing a major part of basic commodities amid poor industrial productivity, the exchange rate has a major role in driving up prices," Ncube said.

Economist Prosper Chitambara said: "As long as the Zimdollar liquidity increases, it results in too much Zimdollar liquidity chasing too few US dollars, which causes the exchange rate to depreciate.

"Obviously that creates pressure because it means that the Zimbabwe dollar income has to be converted into US dollars, thus adding pressure to the exchange rate."

Chitambara said upcoming elections would make it difficult for government to dump the local currency as they need it to finance the polls.

Another economist Vince Musewe said there was a shortage of the greenback in the market.

"Those with US dollars are selling at a premium," he said.

Citizens Coalition for Change spokesperson Fadzayi Mahere said the opposition had answers to the country's dire socio-economic crisis.

"We will restore confidence and the economy will be anchored on macro-economic stability, fiscal discipline, resolution of the debt crisis, financial service sector reform, pension reform and social protection, currency reform, industrialisation and alteration of the accumulation model, central bank reform, rationalisation of the land reform programme including securing land tenure for those who hold agricultural land, agro-industrial transformation, mining sector reform including beneficiation, job creation and formalisation of the economy," Mahere said.

President Emmerson Mnangagwa re-introduced the local currency in 2019 after a decade of dollarisation.

A Zimbabwe National Statistics Agency report released early this year showed that the economy is on a dollarisation trajectory with 78% of transactions for food purchases now being done in foreign currency.

Latest data from the Insurance and Pension Commission (Ipec) shows that the country's insurance sector is gradually moving towards full dollarisation, with industry participants writing business worth about US$300 million last year.

The total foreign currency denominated business written by short-term reinsurers increased by 50% to US$122,10 million during the comparative period in 2021.

Also, about 70% of the total deposits in the banks are in foreign currency, with the remainder being in Zimbabwe dollars.

Government has rejected increasing calls to dollarise.

Source - newsday
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