HomeBusiness DigestBasic Food Prices Rocket Out Of Reach

Basic Food Prices Rocket Out Of Reach

PRICES of basic commodities increased by an average of 1 300% in July because of high inflation, depressed production and profiteering by some retailers.


The increase means a family that spent $1,723 trillion on July 1 needs $6,8 trillion ($680 revalued) for the same goods as at July 30.

The same family could probably need about $8 trillion ($800) by the end of next week.

This also means the increase in the price of basket essentials surged by an average of 67% every week during the month or about $1,2 trillion ($120), according to the Zimbabwe Independent cost of living index.

The rate at which prices increased during the month jumped alarmingly from 9,5% in January, a 570% rise inside seven months.

There is now a countrywide crisis over supplies of basic commodities and affordability of the few that is available in shops.

Salaries have failed to match the rate at which prices are rising due to increased production and operational costs which has resulted in some companies either reducing staff and working hours or closing down outright.

Confederation of Zimbabwe Industries president Callisto Jokonya said manufacturing industry capacity utilisation averaged 18,9% in 2007, down from 33,8% registered in 2006.

Two litres of cooking oil now cost above $900 billion ($90) this week from $250 billion on July 1.

A loaf of bread if available costs $250 billion ($25) from $30 billion during the same period.

Two litres of mazoe, which is no longer affordable for most households, this week cost above $1 trillion ($100) from $120 billion.

Transport recorded the biggest increase during the period under review to $70 billion ($7) from $5 billion.

Economist Tony Hawkins described the price increase as “very sad for everyone” adding that nobody wants to hold Zimbabwe dollars because it was increasingly losing value as a result of the very high rate of inflation.

During the 2008 mid term monetary policy review on Wednesday, President Robert Mugabe warned the country’s business sector to stop profiteering or face emergency measures.

“If you drive us more than you have done we will impose emergency measures, and we do not want to place our country in a situation of emergency rules, they can be tough rules you know,” Mugabe said.

“We want to leave you with the freedom, the flexibility to make decisions . . . You (businesses) need to be rewarded for your efforts, customers also need a fair price not ripping them off,” he said.

National Incomes and Pricing Commission (NIPC) chair Goodwills Masimirembwa said prices being charged were not justified.

“The rate at which prices are rising is a major cause of concern which needs to be addressed,” he said.

Masimirembwa said business has been ignoring prices which have been set by the commission.

The prices being approved by NIPC are way out of sync with the real prices that are already prevailing on the market.

A survey conducted by businessdigest this month showed that by the time the NIPC approves a price, the actual price on the market will be almost three times higher.

Most consumers are performing what appears to be carefully choreographed dance routine: pick up, sigh, put down and move on if not out of the shop.

In supermarkets across the country, the activity along the shelves is the same. The young and old wander the aisles confused and baffled as the assortment of goods $3 trillion ($300) can buy.

The rise in the prices of most basic commodities has been blamed largely on speculative tendencies in the country’s frail economy now in its ninth year of recession.

But economist said the dwindling production levels on the back of increased money printing and a weak currency has resulted in too much money chasing too few goods.

This has been worsened by an acute foreign currency shortagewhich has triggered a run on the Zimbabwe dollar on a thriving foreign currency parallel market.

By Paul Nyakazeya

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