CZI says govt has no capacity for price controls

Paul Nyakazeya



THE Confederation of Zimbabwe Industries (CZI) have proposed urgent pricing mechanisms that protect consumers and providers of goods and service.
RONG>


In a document dated August 23 and addressed to the chairperson of the cabinet Taskforce on Price Stabilisation and Monitoring, Obert Mpofu, CZI said it was not possible for government administrative machinery to determine all prices.


It said that even the National Incomes and Price Commission (NIPC) did not have the capacity to fully research and determine prices.


The document said while business should implement the June 18 base line as directed by the taskforce, September price adjustments should be based on the June monthly Consumer Price Index (CPI) figure of 86,2%.


This means that no adjustments from the June 18 level would be more than 77,6% during the same month, which translates to 90% of the monthly inflation of the month under review.


“The October increases should be based in the July inflation figure. The percentages excludes products whose prices have already been determined by the Task Force,” reads part of the document.


“The need for a self-triggering mechanism cannot be overemphasised. For example sugar, is a raw material in some products and it has been awarded a price increase.


“If there is no immediate corresponding movement in the price of a product in which sugar is a significant raw material then that product’s price will clearly be affected negatively,” said CZI.


The document said retailers should continue with the 20% mark up plus 15% Value Added Tax while the mark up for wholesalers was set at 12,5% for essential consumer goods, excluding luxury ones.


“For all other product businesses (both private and public) they should have the freedom to (determine) prices provided monthly price increases do not exceed 90% of monthly CPI as published by CSO or such other percentages as agreed by government and business leaders having regard to prevailing market conditions,” reads the document.


Business leaders said this was an interim solution, which could only work while a robust and market-related pricing system was being put in place as pricing below monthly CPI would ensure deceleration of inflation.


“Anyone requiring an increase of more 90% of CPI in any one calendar month to submit application to NIPC who would make a determination within seven days,” the industrial body said.


Where the cost of manufacturing products is affected by the movement in the price of controlled and monitored products which are part of a producer’s value chain, there should be an automatic trigger mechanism for the pricing of the affected product.


“For the above recommendations to be effective foreign currency and fuel have to be available for all producers within the formal, official system,” the CZI proposed.