In spite of the softening rates on the parallel market, prices have shot through the roof in the past few weeks with most basic products now beyond the reach of many.
A snap survey by the Daily News revealed that prices of basic commodities have gone up by between two and 125 percent within a month, dampening the pomp and fanfare that is normally associated with the festive season.
Basic goods such as cooking oil, sugar, rice, meat, flour and milk products are fetching much more than they used to last month, presenting major headaches to the authorities.
President Emmerson Mnangagwa has promised better prospects for the country’s economy since being sworn-in last month as Zimbabwe’s second executive president.
Within a month after assuming the reins of power on November 24, the 75-year-old ex-guerrilla leader has come face-to-face with rampant indiscipline and speculative behaviour buffeting the country’s economy.
The Daily News can report that some of the retailers are taking advantage of the seasonal demand associated with the festive season to hike prices and fatten their pockets.
A two kilogram packet of plain flour, which was trading at $1,70 a few weeks ago, is now selling for $1,99 – an increase of about 17 percent.
The same quantity of self raising flour, which used to retail at between $1,89 and $1,99 is now going for between $2, 07 and $2,29 in various retail outlets, translating to increases of nine and 15 percent respectively.
A 2kg packet of ordinary rice that was going for $2,85 by the end of October has gone up by 15 percent to fetch $3,29 while superior quality rice such as basmati and jasmine jumped from around $4 up to as much as $9 over the same period, signifying an increase of a whopping 125 percent.
The price of sugar has gone up marginally from $1, 95 to $1, 99 for a 2kg packet, while a 2 litre bottle of cooking oil is trading at between $4,35 and $4,90.
One litre low fat and full cream milk products that were priced at $1,19 are now going for $1, 49, while another brand that used to go for $1, 19 is now fetching $1, 35.
Meat prices have also rocketed, with commercial beef which cost $4,50/kg at the end of October now selling at between $7,50/kg and $9/kg.
The price of super fillet has risen to as much as $16/kg.
In addition to being in short supply due to the outbreak of avian flu, chicken prices have spiked from $3,50/kg to $7/kg.
The price of table eggs also surged from $5 per crate to $6, 40 per crate over the comparative period.
The margins are even worse for imported luxuries such as chocolates, lotions and sanitary wear products.
Confederation of Zimbabwe Retailers (CZR) president, Denford Mutashu, said while the price hikes were largely a result of the prevailing foreign currency shortages, indiscipline has also set in the market resulting in profiteering.
Due to the scarcity of foreign currency, local companies are being forced to access expensive money on the parallel market with the additional cost being passed onto the consumer.
“Labour has not gone up, but the cost of production is going up. As we approach the festive season, our call is that players should desist from price increases based on profiteering,” said Mutashu.
Mutashu said CZR has noted instances whereby some registered and unregistered retailers are refusing to accept payments effected through mobile money.
He said: “Some claim not to have swipe facilities, while others are putting a cap on the amount of bond coins that could be used to effect payment. The rest has to be of higher denominations.”
The price increases are certain to add more fuel to the inflation fires.
This will put pressure on disposable incomes with workers likely to demand pay increases consistent with the breadline going into the New Year to compensate for the eroded salaries and wages.
According to the latest consumer price index data, inflation spiked the highest this year in October.
Inflation levels in many salient sub-indices remained stagnant during mid-2017, compelling government to introduce an additional $300 million worth of bond notes under a stand-by liquidity support facility in September — with the aim of stimulating foreign exchange liquidity.
Core inflation was 2, 24 percent in October, compared to the 0, 78 percent year-on-year reading the previous month.
Official inflation figures are now being questioned by independent economists with Steve Hanke, an economics professor at Johns Hopkins University in the United States, saying Zimbabwe’s real inflation rate as measured by purchasing power parity and taking into account its de facto exchange rate, was 313 percent a year and 112 percent on a monthly basis.
Hanke, who has written a book about the country’s 2008 crisis, dismissed official statistics that put year-on-year inflation at just 0.78 percent in September as a “truly fantastical piece of artwork”.
“Zimbabwe, welcome back to the record books! You have once again entered the inglorious world of hyperinflation. It is a world of economic chaos, wrenching poverty and death,” he said.
“Its purveyors should be incarcerated and the keys should be thrown away,” he concluded, taking a swipe at the then government of 93-year-old Robert Mugabe who was forced to resign last month.
Confederation of Zimbabwe Industries president, Sifelani Jabangwe, told the Daily News this week that local manufacturers have not hiked prices that much.
He said the country’s largest industrial representative group was of the view that prices of imported goods were the ones that have significantly gone up with locally manufactured products remaining with a 20 percent increase margin from comparative prices last year.
“For the imported goods, it’s mainly driven by the shortage of currency. However, with locally produced good, you should look at it differently.
“Meat, on the other hand, is a different story. We are also trying to understand if the price has been affected by the new regulations for farmers. It could also be the issue whereby some farmers are now asking for half cash payment and half electronic payment, which could be driving up prices,” said Jabangwe.
Economic analysts are predicting doom and gloom for the consumer unless the authorities adopt stern measures to curb overpricing.
There are fears that Zimbabwe could easily slip into another hyperinflationary era reminiscent of the 2007/09 period when soaring inflation obliterated the Zimbabwe’s dollar along with its pensions and savings.
To escape hyperinflation which had topped out at 500 billion percent, the country was forced to adopted the United States dollar in 2009, along with Britain’s pound and the South African rand.
But the relative financial stability of the last eight years has unravelled in the last few months as acute foreign exchange shortages have led to sharp price increases.
Meanwhile money in banks is losing value fast.
University of Zimbabwe economics professor, Tony Hawkins, said blamed the foreign currency shortages for the price increases.
“Most of the goods manufactured in Zimbabwe have an imported component… If you look at money supply on the parallel market, it gives you a better picture of what we are going through,” he said.
Economist, Elliot Lumbe, parallel market cash traders must be eliminated if prices were to go down.
“Let’s get rid of money traders who include big guys in government because they are the ones that access large sums of cash in both United States dollars and bond notes,” he said.
“For goods that are produced locally, there is lack of discipline along the entire chain – from manufacturers down to retailers. Prices are pegged differently, depending on the mode of payment. For example, bond notes have their own commodity value and the US dollar has its own commodity value,” said Lumbe, referring to the existing three-tier pricing system.