adminthe way you operate a business in a hyperinflation environment,” said Finance Minister Tendai Biti at a press conference on prices on Tuesday.
His statement is instructive.
Zimbabwe has been on a major drive to restore economic growth, particularly over the past two years.
The economy, which had been shaken extensively by the hyper-inflationary environment, has responded well to various initiatives as reflected by the positive growth witnessed and the recovery of many sectors of the economy.
It would naturally follow that any factor, internal or external, that may seek to destabilise the economy, should be dealt with decisively.
Not even my grandmother would want this country to experience a repeat of the pre-2009 era of hourly price changes, shortages of cash, basic goods and other challenges brought about by macro-economic instability.
Inflation, which has largely been tamed since 2009, rose by 0,4 percent to 3,3 percent for the month of July. While this figure may be viewed as small or almost insignificant, it would be critical at this juncture to note that any slight movement in inflation has a negative impact on stability.
Hence the market should be wary of any rise in inflation. For Zimbabwe, fears of an inflation spiral are real and need to be taken seriously.
The August figure is expected to rise again, reflecting the increase in food prices that we have experienced since the restoration of duty on some food stuffs last month.
The high inflation in July was attributed to food price increases in particular while other non-food items such as detergents, hotel accommodation and catering services impacted on the figure.
The food component accounts for 32 percent of the Consumer Price Index. Zimbabwe currently has the lowest inflation in the region, a factor that works well for this country in terms of attracting foreign direct investment.
This is a statistic that we should guard jealously as a country. The inflation target of 4,5 percent by year-end should be pursued vigorously but its not looking too well though unless price increases are tamed, not necessarily through price controls but by allowing proper market forces such as demand and supply to be in operation as opposed to artificial shortages or the tendency to profiteer. High inflation has the capability of destabilising efforts to consolidate economic growth.
It is against this background that we urge manufacturers, wholesalers and retailers to take seriously the stern warning by Minister Biti to scrap the duty Government had re-introduced on selected basic goods to cushion local industry. While this was meant to support local industry, reeling from a shrinking domestic market and a harsh export market, industry has instead adopted a defeatist approach that could backfire for the economy.
Therefore, we want to rally behind Minister Biti and encourage him to follow up and act if the prices are not reviewed.
In his Mid-Year Fiscal Policy Statement, Minister Biti imposed duty on cooking oil at 15 percent, maize meal 10 percent and flour between 5 percent and 10 percent.
The adjustments were meant to enhance capacity, productivity, viability and competitiveness of local producers, translating into a win-win situation for both producers and consumers.
However, increases witnessed over the last few weeks are between 30 percent and 100 percent with retailers giving the restoration of duty as the reason for the price adjustments. But trends show that even before the reinstatement of duty, prices have been going up without justification. Why should a bar of washing soap that was selling for between 80 cents and US$1 in the first quarter of the year go up to US$1,70?
Imported cooking was selling for an average US$3,80 but has gone up to US$4,80. Even the price of beef and other meats have gone up while most services and other non-food items have followed suit.
We would want to hear voices from retailers justifying their increases. We know they may not take to the podium because they would certainly stammer in their futile efforts to justify the unjustifiable.
The restoration of duty should have triggered only a slight rise and not by margins that we witness today.
Certainly this cannot be allowed to go unchallenged.
Minister Biti says Government will be monitoring developments. It has all the machinery at its disposal to monitor progress and enforce downward reviews.
Where producers and sellers remain adamant, the full wrath of Government should descend on whoever has not taken heed.
As we always say, the profiteering mentality does not work and should therefore not be allowed to continue one day longer. We applaud the Confederation of Zimbabwe Industries for condemning the price increases and we expect them to knock sense into their constituency.
As I said, we await to hear from the Retailers Association of Zimbabwe on what they have to say about the situation. They certainly need not adopt retrogressive pricing mentalities.
Profit is great.
In fact, all businesses are there to make profit as the primary reason. Certainly they should make the profit but not to the extent of milking the very consumer that makes them realise high sales volumes and hence profits.
The Consumer Council of Zimbabwe has also come out this week to condemn the price increases. I sometimes spoil for a day when consumers would all agree not to buy certain products until prices come down.
This is something that never happens here and I wonder why the consumers are so gullible sometimes. We do not condone violence but as consumers there are ways in which we can effectively protest and arm-twist retailers and manufacturers so they do not take us for a ride.
We need to be forceful as consumers instead of watching passively because every cent counts, particularly in this multi-currency system.
So far, significant increases in international oil prices and rising international food prices look set to upset the country’s inflation outlook so let us not compound the situation by haphazard price increases.
“I am therefore, urging local producers to reciprocate Government support by refraining from unethical, speculative and rent-seeking activities, but rather take advantage of such dispensations to improve productivity,” begged Minister Biti on Tuesday.
Will someone please take heed.
In God I Trust!
Lets debate.
Online Reporter