THE reduction of annualised inflation from 659,40% in September to 471,25% in October should have been a cause for celebration, but very few are popping up the champagne as it has not translated to improved livelihoods.
Shortly after the announcement by the official statistical body Zimstat that inflation had gone down, it revealed that the total consumption poverty line (TCPL) for a family of five had shot up to ZW$18 750 (US$229). For Matabeleland North, the TCPL increased even further to ZW$20 679 (US$252). This has had an adverse impact on the general public most who earn far below these figures.
The situation has been made worse by the increase of electricity tariffs which has had a domino effect on the prices of goods and services. The 50% increments in October and November, has negated the reduced inflation, which is as a result of recent gains of the local currency against the greenback continuing to reflect on its strength.
The drop in inflation rate is largely due to the foreign currency auction introduced in June this year and held weekly by the Reserve Bank of Zimbabwe. The auction has helped stabilise the Zimbabwean dollar, which now hovers around US$1:81,8. This has also resulted in the increased availability of forex, which has slowed down the rate on the parallel market, which is around US$1:ZW$120.
The drop in the inflation rate is also due to measures taken by the Treasury and central bank to curb illicit activities on the parallel forex market. However, the drop in inflation is barely felt by the man on the street.
The stability and the reduced inflation remains a mirage for most workers according to the Zimbabwe Congress of Trade Unions secretary-general Japhet Moyo.
“The majority of workers cannot feel the stability,” Moyo said. “Most of the workers’ wages have not gone up in line with the prices of goods. That is what is being experienced on the ground which is different from what is being said by the government which is not factual.”
He said that retail outlets have brazenly flouted Statutory Instrument 185 of 2020 which obliges them to display the prices of goods in both local and foreign currency.
“Businesses have refused to display prices of goods in both foreign currency and RTGS and this is because they are using an exchange rate which is higher than the official one.
Government has done nothing about it. It is probably because some ministers are shareholders in those businesses. So the workers are on their own. The consumers are on their own.
Businesses and government are birds of the same feather,” he said.
With incomes ravaged by inflation, workers have become restive as evidenced by the strike by nurses and teachers this year.
It is a situation that concerns the consumer watchdog, Consumer Council of Zimbabwe (CCZ).
“I was buying a 5kg of chicken for ZW$1 100 or US$11 (at parallel market rate and US$13,44 at official rate), but now that same 5kg of chicken is now going for more than ZW$1 500 (US$15 at parallel market rate and US$18,33 at official rate). This shows an increase in the US dollar price,” CCZ national chairperson Philip Bvumbe said. “Retail outlets were selling goods at the rate of ZW$100:US$1 but they have reduced to the auction rate of ZW$81,8:US$1. This means the price of the goods in US terms goes up showing the upsurge caused by the distortion.
The market is not reacting quickly. You would have expected the market would have adjusted by now but they have not.”
Bvumbe notes that the distortions have been aggravated by the informalisation of business which stands at over 75%. This, he said, has resulted in informalised shops selling products at cheaper prices than the traditional retail outlets.
The CCZ chairperson said the increase in prices has an adverse impact on the general public with some sectors still earning a minimum of ZW$5 000 (US$61), which is less than a third of the TCPL. Bvumbe said the increase in electricity tariffs by Zesa has increased misery for the consumer.
“The increase in Zesa tariffs was supposed to be piecemeal and when it was discussed then, it made sense but now it is taking a huge portion of the basket. We need a win-win situation where we have electricity but are not overcharged,” he said.
Bvumbe said there is a need for dialogue among stakeholders to find ways of ensuring sustainability and affordability for consumers.
Former Employers’ Confederation of Zimbabwe executive director and labour market analyst John Mufukare said the increases by state enterprises such as Zesa will fuel the increase in inflation.
“The economy is like an ecosystem. lf one part is disturbed, then the whole ecosystem is disrupted. The increases by state parastatals will mean that everything in the whole chain will go up and therefore increase inflation,” Mufukare said.
Though there has been a drop in inflation figures, it still remains very high and is the second largest in the world after Venezuela.