High prices to result in shop closures: Expert

Rumbidzayi Zinyuke Manicaland Bureau
RETAILERS who have continued to increase prices could run themselves out of business within two months due to consumer resistance, economist Dr Gift Mugano has said.

Speaking at a joint meeting between the Grain Millers Association of Zimbabwe and retailers, Dr Mugano said self-regulation was critical to restore sanity in the retail sector.

“The next two months will be telling,” he said. “If we don’t restrain ourselves and continue to increase prices, we will reach a plateau. The levels of inflation and how it has been eroding income of households is so ravaging that the consumers will not continue to sustain their consumer baskets.

“So, it is telling to me, that at that point, no retailer or manufacturer will have the capacity to continue. If we reach a plateau, it can result in collapse of industry, retailers and the whole economy.”

GMAZ will this week deploy price monitors across the country to monitor prices of basic commodities with a view of protecting consumers from being short-changed by unscrupulous retailers.

This follows a Memorandum of Understanding that GMAZ signed with Confederation of Zimbabwe Retailers where they agreed on a model pricing system of basic commodities.

Dr Mugano said the efforts by GMAZ were critical in restoring sanity and allowing self-regulation in the industry.

“The efforts being put in place by the retailers and manufacturers are timely and critical and we hope everyone in the value chain involved in the cost build up will exercise restraint in a manner that is reflected in some kind of social contract so that we have order, otherwise we are actually building a time bomb,” he said.

Dr Mugano said pricing was a symptom of a problem of foreign currency shortage and it called for long-term solutions.

“The solution is not an overnight thing; we need to have investments into the country,” he said. “We need confidence build up because we have money in the nostro accounts which is enough to reduce the exchange rate if we are trading on foreign currency.

“Government needs to investigate what is causing people who are holding money in their nostro accounts to not trade it. Private sector should also know that they have a key responsibility to provide solutions in this country.”

Confederation of Zimbabwe Retailers president Mr Denford Mutashu said some retailers were being mischievous in implementing price hikes.

“People are suffering,” he said. “Those in the rural areas do not have the money to buy sugar at $20. So, we need to self-regulate as retailers. If we continue on this path, we are looking for trouble.