ZIMBABWE is witnessing another wave of massive price increases, following the presentation of the 2019 mid-term fiscal policy review, which are further decimating citizens’ incomes.
In the mid-term 2019 fiscal review announced on August 2, 2019, Finance and Economic Development minister Mthuli Ncube increased electricity tariffs threefold, and nearly did the same for fuel imports, hiked charges for State services and goods and also increased the money transfer tax for mobile money agents.
This has further decimated salaries which remained unchanged amid a 176% inflation surge, the highest since dollarisation in 2009.
Electricity charges increased from 9,86 cents (US1 cent) per kilowatt hour (kWh) to 27 cents/kWh (3 US cents), while taxation of fuel imports more than doubled from 19% and 16% of the landed cost for petrol and diesel to 45% and 40%, respectively.
Last Friday, government gazetted Statutory Instrument 172 of 2019 paving the way for a toll fee hike. Light motor vehicles prices are now required to pay $10 up from $2, mini-buses $15 up from $4 and conventional buses will now pay $20 up from $5 with heavy vehicles and haulage trucks paying $25 and $50, respectively.
Route authority applications fees were also increased from $25 to $125, operator’s licence application fee was reviewed to $250 from $50 and original motor vehicle plates now cost $400 from $80, while changing number plates also attracts a similar fee.
Retailers have responded by hiking prices of goods since last week, further eroding the majority’s meagre salaries which have remained stagnant against a soaring cost of living.
Barely three days after Ncube announced an increase in import tax on fuel — petrol and diesel prices increased by 26% from $7,55 to $9,01 and from $7,22 to $9,06 respectively further pushing prices of basic commodities beyond the reach of many Zimbabweans.
Fuel prices have increased fourfold since June this year as the local currency continues to devalue.
Amid ever-soaring fuel prices, the market has witnessed an unprecedented demand for diesel. Most companies have resorted to generators due to crippling power shortages.
A survey by NewsDay revealed that prices of basic commodities have increased during the week.
Refined meal mealie retail prices have increased from $23,08 to $38,96 for 10kg.
Bread prices have increased to $8,30 per loaf, cooking oil now costs $24 (2-litres), sugar $15 (2kg), salt $9 (1kg) and flour now averages $20 (2kg).
Transport costs for both long and short distances have doubled since Zimbabwe re-introduced the Zimdollar. A bus trip from Harare to Kariba now costs $70 from $40. The Bulawayo-Harare trip now gobbles $120 from $60.
Harare to Chitungwiza commuter fares went up from $4 to $7 and Harare to Westlea, Warren Park, Kuwadzana and Msasa Park increased to $3 from $2.
Telecommunication companies, Econet and NetOne also increased their data charges to $18 for 400 monthly WhatsApp bundle and $10 for 320 monthly WhatsApp bundle, respectively.
Consumer Council of Zimbabwe chairperson, Philip Bvumbe said availability of the local currency has to be stabilised first in order to resolve price increases in the country, adding price hikes should be followed by a corresponding salary increase.
“As long as we do not resolve the issue of currency by stabilising the availability of the Zimbabwean dollar, the issue of prices is not going to be resolved. People are still using arbitrage pricing and some supermarkets are running 24 hours on generators while others are forced to operate only at night, giving them a justification to increase prices,” Bvumbe said.
“It has become difficult for us to say if the price increases are justified as they are being increased without a corresponding salary increase. The country has reached what I call price plagues and we as consumers can no longer afford these goods.”
He said Zimbabwe has gone back to the 2008 era with the only difference being that the goods are available.
“The minister has raised the tax threshold up to $700, that is a realisation that wages must reach $700.
“Most companies are now coming up with hardship allowances as they realise that people can no longer survive on their monthly wages. We are back to 2008 except that we have goods now. Life is now unbearable for the ordinary person,” Bvumbe added.
Economist Gift Mugano said the salaries will continue to erode due to price increases and more price upsurges will weaken the consumers’ purchasing power.
“The people’s salaries will continue to erode. These price adjustments continue to erode the already eroded salaries. Using the indexing, on average, civil servants earn about US$40. The reason why I am using indexing is because the prices are being charged against the exchange rate,” Mugano said.
“Civil servants used to earn US$400 in real terms, but now they are earning 10 times lower than the actual amount they once earned. Any more price increases will continue to weaken the consumer power.
“I see a situation whereby prices will reach a point that I call price plagues in which people will not be able to purchase anymore. In fact, we have already reached that stage.”