Prices of basic goods shoot up

HARARE - Prices of basic consumer goods have gone up sharply over the past few weeks, on the back of worsening foreign currency shortages in the country.

At the same time, experts warn that the price increases are set to continue beyond the July 30 national elections — as the insatiable demand for the coveted United States dollar keeps growing as both speculators and businesses increasingly rely on the thriving black market for their forex needs.

This has seen the cash exchange rate of 100 US dollars rising to 142 bond notes on the parallel market — from about 130 a month ago — while the electronic transfer rate on platforms such as Zipit, RTGS and mobile money transfers has soared to a whopping 170 bond notes over the same period.

In addition to the soaring foreign currency exchange rates on the black market, the prices of fuel have also gone up — further pushing up production costs for the local manufacturing sector.

Confederation of Zimbabwe Retailers president Denford Mutashu confirmed to the Daily News on Sunday yesterday that prices had gone up significantly in recent weeks, and were set to continue rising.

“The global fuel price pressures, coupled with the dire foreign currency situation in the country, have had the negative effect of pushing the prices of both locally manufactured and imported goods up.

“Manufacturers are finding it increasingly difficult to source forex to procure raw materials from outside. The exchange rates have escalated on the parallel market and this has pushed prices of basics on a northward trajectory,” he said.

Confederation of Zimbabwe Industries (CZI) president Sifelani Jabangwe also said the local manufacturing industry was reeling from the critical shortage of foreign currency.

“Businesses are having great difficulties accessing foreign currency. This has been mainly due to the fact that our requirements have grown, in addition to the backlog which we still had.

“Supply has not matched this demand and in order to re-stock or buy raw materials, we have had to turn to the parallel market where the premium is ridiculously high now.

“Our economy is not generating enough foreign currency and this is why we are encouraging companies to export more and not just consume the foreign currency they generate,” Jabangwe said.

However, Reserve Bank of Zimbabwe governor John Mangudya said the foreign currency shortages were a result of the expanding economy which was not matched by the pace of local production which was critical for producing goods for export.

Former Finance minister Tendai Biti, who was credited with steering the economy from its black hole after the formation of the inclusive government in 2009, also told the Daily News on Sunday that the situation was likely to get worse before it got better.

“As I always say, you can rig an election but you can’t rig an economy. The massive dislocation in the economy is reflected in an exorbitant parallel exchange rate of over 70 percent, as well as the runaway inflation — reflecting that the economy does not have confidence in the current leadership who have no idea of how to turn around an economy which has collapsed,” he said.

According to figures from the Consumer Council of Zimbabwe (CCZ), the monthly food basket for a family of six jumped from $125,37 to $141,63 as at the end of May this year.

Among the basic goods whose prices continue to increase are poultry products, roller meal, detergents and brown sugar.

A survey by the Daily News on Sunday yesterday revealed that a crate of 30 eggs was being sold at an average price of $7,50 or 25 cents per egg at one retail chain. Economy beef was averaging $7 a kg, up from $5 which was the going price two months ago.

A tablet of lower end users’ soap, which retailed at 95 cents at the beginning of May, was being sold for $1,20 — while goods considered luxury items, such as Nivea shower gels and lotions, were now priced at between $8 and $10 respectively.

“I have seen informal figures that indicated that inflation in domestically produced goods is running at 25 percent, and imported goods at about 100 percent.

“I think the main thing that is driving prices is the increase in the informal rates for the dollar ... and that is increasing the cost of importing raw materials,” economist and politician, Eddie Cross, said.

University of Zimbabwe economics professor Tony Hawkins also told our sister publication the Daily News last week that the worsening foreign currency shortages were at the heart of the unfolding crisis.

“Most of the goods manufactured in Zimbabwe have an imported content ... If you look at the money supply on the parallel market, it gives you a better picture of what we are going through.

“The IMF also forecast inflation to be around 30 percent this year and all I can say is that it may be the highest we have seen since 2008,” he said.

Zimbabwe has not had its own currency since February 2009 when it adopted the multiple currency system, in which the US dollar has become the main trading currency.

President Emmerson Mnangagwa hinted about the return of the Zimbabwe dollar when he addressed the ill-fated Zanu PF rally at White City Stadium in Bulawayo last weekend.

“Our Zimbabwe dollar collapsed in 2008 and 2009. We then adopted a basket of currencies — the South African rand, the United States dollar, the British pound, the Euro and so on.

“Initially, the US dollar and the rand accounted for 40 percent each, and the other 20 percent was the balance of other currencies. As time went on, the US dollar became dominant.

“The US dollar today takes about 90 percent of our transactional activity in the economy and we have no control over the US dollar.

“It is time that we must adopt our way of restoring the dignity of our country by creating our own currency,” Mnangagwa said.

This year’s elections have generated a lot of interest among both ordinary Zimbabweans and ambitious politicians alike, with the Zanu PF strongman facing the youthful MDC Alliance candidate Nelson Chamisa and 21 other presidential aspirants in the July 30 plebiscite.

Many people are anticipating a close contest between Zanu PF and the MDC Alliance, as well as between Mnangagwa and Chamisa.

The elections will also be the first in the past two decades not to feature ousted former president Robert Mugabe and the popular late MDC leader Morgan Tsvangirai, who lost his valiant battle against colon cancer in February.

And for the first time in post-independent Zimbabwe, there will also be female presidential candidates — taking on their male counterparts for the right to occupy the most powerful political office in the country after this month’s poll.

Comments (19)

yatove garo ziva kuti tine vavengi mukati medu vanoita economic warfare kana toenda kuma elections to discredit government iripo panyanga manje zvichapera zvese izvi kana ED apinda because we can't vote for those vanoda kutanga vationesa moto kuti titi government haigone basa ivo vachiziva havo kuti ndidzo horomori

Bheveni sibanda - 2 July 2018

thats the problem with the zimbabwean business people poor business ethics. the government thru President ED pledged to increase its workers salaries and allowances, these guys want to subotage both the government and its workers. Why? This will not force people to vote for MDC or any other party every norml sees its a political ploy if you really love the electorate why do you want it to suffer. The president is doing his best to provide the best economic and business environment but now evil minds takes its course to make others suffer yet you come to us crying for our votes. my message to Zimbabweans is lets not be fooled with these pitching pilitical parties we have suffered enough because of MDC lets vote for ED he is reengaging the europeans and Americans they are coming to do business. let these morons hike their prices but soon that will be over. bitter civil servant. ED PFEEEE

kid marongorongo - 2 July 2018

With all these mega deals....how come we are yet to see any tangible benefits? Comrades, before we see imaginary enemies everywhere, let us understand the basics of our economics. The deficit budgeting not in any way underpinned by productivity capacity will only lead us to the cesspit. Incessant government borrowing eg for salaries and for GMB programmes. GMB which buys maize at 340 and sells at 250. Who do you think pays for the difference? We all do. Through inflation, foreign currency shortages and every other ill. Allow Chamisa to bring back Biti to the Finance Ministry for a better Zimbabwe. Together we will make a difference come JUly 30.

Diaspora Proxy Vote Strategy - 2 July 2018

Now, this is the best time when MDC allience leader has to chip his efforts in to serve not to just waste his trust pushing ZEC to edges. Suffering always stay if we have talkative people who do not know how to rescue but how to sink.

Uncle Sam - 2 July 2018

@ Diaspora, the same Biti left us with a huge national debt, he ddnt have a plan to pay national debt, he left us with 200 and something dollars in the national purse.

Django Django - 2 July 2018

true @kid, there is no room for sabotage in Zim economy, shuwa vanhu kungonzwa kuti civil servant pay rise vakutokwidzawo ma price, tosvikepi asi

Riot263 - 2 July 2018

The problem is not with the recent govt, its with our corporate citizens, they are used to Mugabe's junglish survival of the fittest way f business

Dombo Rakaomarara - 2 July 2018

these bussiness people should be arrested and brought to book mhani, ED is busy reviving industries and ivo vakungokwidza zvnhu for no reason haa nxa

Hondo Zvenyika - 2 July 2018

akomana vanhu ngaasungwe, chero pepsi yakubikwa muno unowana mumashop vachingodhurisa. pasi nemhandu dze progress

Samora - 2 July 2018

Just wait and see how ED will react to this. Leadership is also about handling challenges. If he fails then we can judge him

Sankara - 2 July 2018

zvema disnyongoro izvi ZANU PF yaramba

Aladin Aladin - 2 July 2018

I dont think he ED that reduced blood price from $300 to $0 will fail this?

Flame - 2 July 2018

this is not acceptable, regai tingovhota zvakanaka

Virus Vigoroso - 2 July 2018

its all because of chamisa.

madikizela - 2 July 2018

Some are saying this is Chamisa's subotage, Why does Chamisa hate the people of Zimbabwe this much?

Chamisa Neria - 2 July 2018

making people suffer has always been the MDC Campaign stategy, from begging for sanctions to this now.. i strongly believe they have a hand in this economic sabotage

Murenga - 2 July 2018

About foreign currency im not worried , ED has got it

Grace Moyo - 2 July 2018

you are right flame

kokerai chisvo - 2 July 2018

My sister Grace, I do not doubt that ZANU pf has the forex. They have shown us theIr wealth by importing cars, campaign regalia etc to the tune of USD 200 million. We all know that ZANU pf and its accolites were the major shareholders in the diamond companies. We all know that forex was generated. But my sister, I hope to live long enough to see that money being applied towards the common good, towards national projects, for the benefit of you and me. I am not moved by rhetoric when I am staring at 37 years of economic malfeasance. Chamisa PFEE

Diaspora Proxy Vote Strategy - 2 July 2018

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