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This came out at a recent National Economic Consultative Forum (NECF) taskforce meeting.
Representatives from food manufacturers such as Olivine Industries and National Foods said that their pricing structures had remained stable despite concerns that local producers were unjustifiably taking advantage of the reinstatement of import duty on some basic commodities.
Local producers’ pricing structures presented at the meeting showed that the price of locally produced food items has remained stable during the period, and in some cases reflecting both slight increases and declines.
For instance, the cost of a 10kg bag of Red Seal roller meal, which stood at US$4,59 prior to the Mid-Term Fiscal Policy Review, currently costs around US$4,52, reflecting a 1,53 percent decline.
During the same period, a 10kg bag of Red Seal Pearlenta rose marginally from US$6,58 to US$6,61, representing a 0,46 percent increase.
However, a 2kg bag of Mahatma rice, which previously cost US$2,79 before the review now costs US$3,10, a 11,10 percent change.
Buttercup margarine declined by 11,30 percent from US$3 to US$2,66 in the period under review.
The price list also shows that commodities such as both brown and white GoldStar 2kg sugar, Lacto 500ml, Sterimilk 500ml did not reflect any price shifts.
Local products typically rise on changes in inflation, currency fluctuation, increase in labour costs and utility charges. However, there have been no major shifts in respect of these although the recent proposal by the Zesa Holdings has the potential to impel inflation.
Meanwhile, the Confederation of Zimbabwe Industries has defended the move by Government to reinstate import duty on some basic commodities.
CZI president Mr Joseph Kanyekanye said the recent spate of price hikes was only transitory.
“For our case, it is not a macro-economic contradiction that prices will increase when duty is imposed. The imposition of duty on imports has been done with the intention of increasing capacity
utilisation, promote value addition and, most importantly, to create employment.
“Prices are therefore bound to increase in the short run, as firms move from low capacity to high capacity. However, in the long run, as capacity and output increase, prices are expected to become competitive with regional and international levels,” he said.
Mr Kanyekanye, however, said that it is the extent to which prices have been increasing that should be a cause for concern.
“To that end, it is critical to understand the pricing model for both retailers and manufacturers, and try to see if they are not abusing that model, putting market forces out of context,” he said.
Price increases by local companies are perhaps attributable to the fact that industrial capacity – roughly 50 percent – is still very low, which means that a sudden imposition of duty on imports will result in demand for imported products falling and simultaneously increased demand for local products that are low in supply.
To this extent price increases tend to occur as a rationing function. Buy Zimbabwe spokesperson Mr Robert Muganda said local industry should be given time to prove themselves worthy of the review on import duty.
“We are generally happy that the NECF Industrial Taskforce has noted the potential benefits of the recent import duty review to the re-industrialisation of the country.
“Industry should be given the opportunity to prove the relevance of the policy decision,” he said.
Online Reporter