PRICES of basic commodities have continued to fall in light of measures being taken by Government and the Reserve Bank of Zimbabwe (RBZ) to tame inflation which was stoked by unscrupulous business tendencies, rent-seeking behaviour and forward pricing.
This comes as Government has adopted tough monetary policy measures targeting speculative exchange rate manipulators who were previously fuelling unjustified black-market volatility that eroded the value of the local currency.
The prudent monetary policy has been buttressed by an equally robust fiscal policy which has seen Treasury getting tough on major Government suppliers and contractors through tightening controls in payments.
Government is putting in place stringent measures to regulate advance payments for contractors, after some failed to deliver on their obligations and others indulged in financial speculation on the black market.
It has also given all ministries, Government departments and agencies up to today (September 2) to submit due diligence reports on all contracts that were submitted as at July 31 but whose payments were suspended after it was noted that the pricing models were based on parallel market rates.
The introduction of gold coins, drastic reduction in the price of fuel, implementation of a tight monetary policy aided by corresponding fiscal measures, have combined to tame inflation.
Consequently, in August, month-on-month inflation dropped to 12.4 percent from 25.6 percent in July in response to corrective macro-economic policy measures being implemented by the Government, which have started pushing the cost of living downwards.
The slowdown in inflation is also being buttressed by the continued decrease in fuel prices as the country strives to contain the cost of production, especially energy, which has recently been a major factor behind spiralling prices of basic goods and services.
According to the Zimbabwe Energy Regulatory Authority (Zera), the latest price of diesel is US$1.74 per litre from a peak of US$1.88 while petrol is US$1.58 from a peak of US$1.77.
In line with Treasury’s projection that inflation would continue to drop resulting in restoration of consumer spending power, the Zimbabwe National Statistical Agency (Zimstat) has revealed that the month-on-month inflation rate has been almost cut by half from the July rate.
The month-on-month inflation rate is calculated from the percentage change in the index of the relevant month of the current year compared with the index of the previous month in the current year.
In compiling the Consumer Price Index, ZimStats monitors price levels of about 495 products categorised according to United Nations Statistics Division’s Classification of Individual Consumption by Purpose (COICOP).
The price of cooking oil is now ranging from $2 999 to $3 199 depending on the shop, down from the previous $3 999 while a litre of fresh milk is now costing $899, down from $1 099,99.
A 2-kilogramme packet of sugar has also been reduced to $1 579,99 from $1 749,99 while a kilogramme of salt has remained at $399.
Added to that, the rate of buying United States dollars has also fallen to $650 per US$1 from $1 000 per US$1 on the streets.
Consumers have welcomed the reduction of prices of basic commodities saying the Second Republic has been battling to make life easier for the ordinary person, and a raft of measures that were taken are now paying dividends.
“We are very happy with the way prices of basic commodities are going down. It shows that we are going somewhere as a country and I would like to commend the Government for standing with it’s people and making sure that all basic goods are affordable to an ordinary person,” said Mr Lloyd Mangondoza of Mabvuku suburb in Harare.
Mrs Jayne Munatsi echoed the same sentiments saying before Government’s intervention, prices of basics were spiralling out of control.
“We were getting worried with the way the price of mealie-meal and cooking oil were increasing but now we are relieved with the significant decrease which we have witnessed lately. It shows that the supply is now surpassing demand and we hope that the prices will continue to go down,” she said.
Another Harare resident, Mrs Lucia Dube said she was also happy with the stability of prices of basic goods and she hoped that the prices would continue to fall.
“The reduction in the prices of basic goods shows that our local currency is gaining strength. I am happy that an ordinary citizen will not have to worry about buying their groceries at exorbitant and unpredictable prices.”
Mr Tobias Tongofa said he would be happier to see prices of basics falling further downwards.
“Now we have market confidence as prices have been stable for more than a month now. We would be happier if the prices continue to fall. This shows that the Second Republic has put in place the right corrective measures that have restored sanity in the market.”
Economist Dr Langton Mabhanga said the reduction in prices of basic commodities was a result of President Mnangagwa’s interventions.
“This goes back to the May 7 pronouncement by the President of keeping an eagle eye on bulk transfers of the Zimbabwe dollar. This aided the arrest of inflation. The introduction of gold coins also contributed to ensuring that the local currency was directed towards investment.”
Dr Mabhanga commended the President for his intervention that resulted in a price reduction in the local market.
The president of Confederation of Zimbabwe Retailers, Mr Denford Mutashu, said they have witnessed a significant stabilisation in fuel prices.
“The prices have stabilised with some actually coming down which is a positive development by the Government,” he said.
“We are quite optimistic that the stability is going to be sustainable. We should strike a balance in the way we maintain our price stability because the market is too liquid to maintain the balance. We should always ensure that demand is low because the rate of inflation is decreasing.”
The Governor of the Reserve Bank of Zimbabwe, Dr John Mangudya, said on the back of the tight monetary policy stance pursued by the bank, the official and parallel market foreign exchange rates were expected to converge in the outlook period, thereby fostering price stability and anchoring inflation and exchange rate expectations.