News / National
Massive price hikes throw the Zimbabwe economy into turmoil
28 May 2023 at 12:54hrs | Views
THE Zimbabwean government is having sleepless nights over price hikes, which have continued unabated, plunging low-income earners into immense poverty, a snap survey by The NewsHawks.
Commodity prices have been spiralling out of control in both the local currency and the United States dollar, worsening the plight of workers, whose wages are predominantly in Zimdollars.
Although Zimbabwe's inflation is officially 75.2%, independent estimates say it is 666%.
Last week, cabinet announced that it would conduct an inquiry into why prices have been raging, raising the need to liberalise the exchange rate to allow market forces to determine prices and attain efficiency.
Finance minister Mthuli Ncube and Reserve Bank of Zimbabwe authorities have been making agitated statements about the price escalations, threatening retailers and producers.
This week, the Competition and Tariff Commission and the National Competitiveness Commission released a report on the spike in prices.
The study, conducted by various government agencies, assessed pricing disparities, investigated cost drivers of recent price hikes, monitored the movement of basic commodities into the informal sector, and tracked the impact of import licence and duty removal on price stabilisation.
Numbers from the national statistical agency show that over 70% of all transactions are now being carried out in hard currency.
A survey by The NewsHawks this week shows that prices have been skyrocketing, with most retail outlets accepting EcoCash and United States dollars, while swipe services were occassionaly down.
Findings of the survey showed that mainstream retail outlets have been on a steep end. For instance, Mega rice is costing ZW$6 779 at a rate of ZW$2 350 against the US dollar, which translates to US$2.90, despite it costing US$1.90 in tuckshops.
A 10kg pack of Victoria mealie-meal is costing ZW$17 465 (US$7.40) while two kilogrammes of Gold Star sugar is costing ZW$7 459 while a kilogramme of Hullets Brown Sugar is costing ZW$3 439. Cooking oil price has also been on a continual upward trend, with a two-litre bottle now ZW$10 989.
In tuckshops, commodity prices have been non-movers, slightly maintaining their prices.
Consumers who spoke to The NewsHawks say they are considering removing some "luxuries" off their home budgets as the price hike has made life unbearable.
"A two-litre bottle of Quench juice now costs ZW$6 999, and we have children who are going to school. I think we are going back to the 2008 era, but the only difference is that right now, there are commodities in the shops.
"Then, the money was useless, and available in abundance, but without commodities on shop shelves," said a consumer.
As previously reported by The NewsHawks, an experienced rural teacher earned ZW$39 636 (about US$30 on the prevailing parallel market rate), while the rural allowance is ZW$1 982 (US$1.30) and the housing allowance is ZW$7 508 (US$5).
Following the 100% hike last month, this means a teacher would earn ZW$79 272, a cushioning allowance of US$250, and an additional teaching allowance of US$80, bringing the total to US$330, which is lower than the US$800 and US$1 200 proposed by worker organisation.
Despite the hike, the salary is still not enough to purchase basic commodities for workers, whose livelihoods have been continually deteriorating in comparison to the Mugabe era.
When President Emmerson Mnangagwa rose to power on the back of a military coup in November 2017, teachers, among other public sector workers, were earning an average of US$540, which they are now demanding.
Findings from the survey are also contrary to the report by ZimStat titled: "Household Welfare Monitoring in Zimbabwe" which shows an increase in basic commodity consumption, with the situation continually worsening.
"At national level, the proportion of households that were able to buy cooking oil increased from 55% in round 8 to 62% in round 9. The proportion of households willing to buy cooking oil slightly increased to 69% in round 9, from 68% in the previous round.
"About 47% of the households expressed willingness to buy maize meal in round 9, representing a six percentage-points increase from the previous round. Further, households' ability
to buy maize-meal increased by 9 percentage points to 44% in round nine," read the report.
According to the report, the proportion of households consuming own-produced maize-meal was 44% in round 9 compared to 48% in round 8. In rural areas, 61% of households consumed own maize produce in round 9, compared to 63% in round 8.
Consumption of own maize meal in urban areas was 6% in round 9 compared to 10% in round 8. Likewise, the share of households consuming own-produced chicken was 28% at national level, 36% in rural areas, and 10% in urban areas.
Commodity prices have been spiralling out of control in both the local currency and the United States dollar, worsening the plight of workers, whose wages are predominantly in Zimdollars.
Although Zimbabwe's inflation is officially 75.2%, independent estimates say it is 666%.
Last week, cabinet announced that it would conduct an inquiry into why prices have been raging, raising the need to liberalise the exchange rate to allow market forces to determine prices and attain efficiency.
Finance minister Mthuli Ncube and Reserve Bank of Zimbabwe authorities have been making agitated statements about the price escalations, threatening retailers and producers.
This week, the Competition and Tariff Commission and the National Competitiveness Commission released a report on the spike in prices.
The study, conducted by various government agencies, assessed pricing disparities, investigated cost drivers of recent price hikes, monitored the movement of basic commodities into the informal sector, and tracked the impact of import licence and duty removal on price stabilisation.
Numbers from the national statistical agency show that over 70% of all transactions are now being carried out in hard currency.
A survey by The NewsHawks this week shows that prices have been skyrocketing, with most retail outlets accepting EcoCash and United States dollars, while swipe services were occassionaly down.
Findings of the survey showed that mainstream retail outlets have been on a steep end. For instance, Mega rice is costing ZW$6 779 at a rate of ZW$2 350 against the US dollar, which translates to US$2.90, despite it costing US$1.90 in tuckshops.
A 10kg pack of Victoria mealie-meal is costing ZW$17 465 (US$7.40) while two kilogrammes of Gold Star sugar is costing ZW$7 459 while a kilogramme of Hullets Brown Sugar is costing ZW$3 439. Cooking oil price has also been on a continual upward trend, with a two-litre bottle now ZW$10 989.
In tuckshops, commodity prices have been non-movers, slightly maintaining their prices.
"A two-litre bottle of Quench juice now costs ZW$6 999, and we have children who are going to school. I think we are going back to the 2008 era, but the only difference is that right now, there are commodities in the shops.
"Then, the money was useless, and available in abundance, but without commodities on shop shelves," said a consumer.
As previously reported by The NewsHawks, an experienced rural teacher earned ZW$39 636 (about US$30 on the prevailing parallel market rate), while the rural allowance is ZW$1 982 (US$1.30) and the housing allowance is ZW$7 508 (US$5).
Following the 100% hike last month, this means a teacher would earn ZW$79 272, a cushioning allowance of US$250, and an additional teaching allowance of US$80, bringing the total to US$330, which is lower than the US$800 and US$1 200 proposed by worker organisation.
Despite the hike, the salary is still not enough to purchase basic commodities for workers, whose livelihoods have been continually deteriorating in comparison to the Mugabe era.
When President Emmerson Mnangagwa rose to power on the back of a military coup in November 2017, teachers, among other public sector workers, were earning an average of US$540, which they are now demanding.
Findings from the survey are also contrary to the report by ZimStat titled: "Household Welfare Monitoring in Zimbabwe" which shows an increase in basic commodity consumption, with the situation continually worsening.
"At national level, the proportion of households that were able to buy cooking oil increased from 55% in round 8 to 62% in round 9. The proportion of households willing to buy cooking oil slightly increased to 69% in round 9, from 68% in the previous round.
"About 47% of the households expressed willingness to buy maize meal in round 9, representing a six percentage-points increase from the previous round. Further, households' ability
to buy maize-meal increased by 9 percentage points to 44% in round nine," read the report.
According to the report, the proportion of households consuming own-produced maize-meal was 44% in round 9 compared to 48% in round 8. In rural areas, 61% of households consumed own maize produce in round 9, compared to 63% in round 8.
Consumption of own maize meal in urban areas was 6% in round 9 compared to 10% in round 8. Likewise, the share of households consuming own-produced chicken was 28% at national level, 36% in rural areas, and 10% in urban areas.
Source - NewsHawks
