THE long uninterrupted hyperinflationary environment in the country has resulted in the soaring prices indexed to foreign currencies ending up at four times more than anywhere else in the world.
With no immediate long-term economic plan or growth on the ground, Zimbabwe is said to have “devalued” its major trading currencies, the US dollar and South African rand.
While prices in Zimbabwe are influenced by the US dollar because of inflation, the parallel market rate which happens to be the “acceptable” way of pricing in the country has left the countryâ€™s products costing about four times more than in other parts of the world.
Most outlets are using the street parallel market rate, which they say is fair value as opposed to the “controlled” inter-bank rate.
Some companies are appearing to be using the transfer rate which is nearly 20 times more than the interbank rate.
A 10kg bag of parboiled rice, which cost about R100 in South Africa, or K75 000 (about R150) in Zambia is being sold for R500 or $5 500 in Zimbabwe.
A loaf of bread in Zimbabwe cost $150 or US$1,50 using yesterdayâ€™s rate. In Europe the average cost of bread is US$0,75. In South Africa the average price for a loaf of bread is US$0,64.
A product which cost US$20 in Zimbabwe, will probably cost about US$8 in the region or about US$5 in Europe and America.
Hotel accommodation and catering charges in foreign exchange are now threatening to drive away foreign tourists to neighbouring countries.
A dayâ€™s stay at a five star hotel in Zimbabwe cost about $22 000 or US$220 using the parallel market rate without breakfast. The same facilities cost less than US$150 with breakfast included elsewhere in the region.
“There is no way a right thinking tourist would be attracted to a country where hotels charge about US$40 for a hamburger,” said a tourism expert.
“This is ridiculous, yet most of our players charge this much. Zambia, South Africa and Botswana quite naturally will record an increase in arrivals due to these distortions.” A burger costs less than US$5 in the US.
Independent economist, Erich Bloch attributed the price increases in US dollars to low production in industry and the resultant ballooning of overhead costs.
â€œBusinessÂ is selling smaller volumes atÂ those prices to recover overheads which are much higher than foreign companies . . .Â Secondly people are tackling this issue based on projected value of the local currency. Inflation is now feeding on itself,â€ Bloch said.
A recent survey by the Confederation of Zimbabwe Industries indicated that business was now operating below 30% capacity utilisation thereby pointing towards an increase in imports from neighbouring countries to meet local demand.
Residential properties cost about five times more in US dollar terms than anywhere else in the world.
The property market, an erstwhile investment option for pension funds and large companies is now increasingly being steered by individual investors.
Demand from Zimbabweans in the Diaspora has also pushed the cost of residential properties in United States dollar terms.
â€œThe attraction of property for investors is its ability to outpace or at worst keep pace with inflation as well as supposedly maintenance of a United States dollar value,â€ said Admire Mavolwane, an investment analyst.
Mavolwane however said the cost of renting business properties was generally lower in Zimbabwe in comparisonÂ to other properties in the region.
â€œThe residential property would appear to be the most attractive at the moment, as the market remains strong as a reflection of the limited stock and speculatorsâ€™ attempts to hedge against inflation.â€
Meanwhile the number of traditionally subsidised parastatals and government departments charging some of their services in foreign currency is on the increase as the government continues on its desperate bid to replenish dry foreign currency reserves.
This development, analysts said signaled â€œprogressâ€ towards the complete dollarisation of the economy.
By Bernard Mpofu