eBusiness Weekly
Kiyara Matambanadzo
Prices of basic commodities have continued to rise, with sharp increases notable over the past month that reflect recent surges in the foreign currency exchange rate both on the official interbank market and the parallel market.
Basic commodities such as roller meal, cooking oil, rice, sugar, salt, flour, bread, milk and eggs have recorded significant increases since the beginning of the year, but particularly over the last couple of weeks.
The situation has resulted in a reduction in the standard of living as the prices of goods and services have increased in a way that is not in tandem with consumers’ disposable incomes which have been eroded by inflation.
Zimbabweans are struggling to cope with the seemingly runaway inflation as the parallel market rate continues to climb and the average person fails to adjust to the sudden price hikes as unemployment is widespread while those employed are earning salaries that are not in tandem with the inflation rate.
The country’s annual rate of inflation stood at 540,16 percent for the month of February, according to latest figures by the Zimbabwe National Statistical Agency (ZimStats). On a month-on-month basis, local prices of goods and services rose by 13,52 percent during the same period compared to 2,23 percent during the previous month.
The increase in the prices of goods and services is largely attributable to movement in the foreign currency exchange rate.
The forex rate on the interbank market has this week moved from around 18 to the US dollar to around 24,5.
The parallel market rate is at around 40 to the US dollar from around 28, last month.
Confederation of Retailers Zimbabwe (CRZ) president Denford Mutashu told Business Weekly that most businesses are using the parallel market forex rate to hedge against hyperinflationary pressures in the economy.
He explained that future pricing trends, whether upwards or downwards will be influenced by the availability or otherwise of foreign currency.
“The major stabiliser to a currency is production and sustained export growth.
The informal structure of the economy remains an Achilles heel and a bedrock for black market activities to thrive while threatening the existence of formal businesses,” he said.
Last month, TM Pick and Pay, for example, priced 2kg rice at $48,99, a litre of milk at $23,99, a 2kg sugar at $44,99, a loaf of bread at $21,00 and a crate of eggs at $109,00.
However, prices of basic commodities have increased sharply since then.
In the same retail shop, 2kg rice is
now priced at up to$69,99, a litre of milk at $33,99, 2kg sugar at $65,99, a loaf of bread at $26,99, a crate of 30 eggs at $114,99
and 2 litres cooking oil is currently priced at $117,99 from $79,99 in February
2020.
In December, the price of mealie meal stood at $115,00 until the Government stepped in to subsidise mealie meal to $50,00 per 10kg bag, but last month increased the price to $70.
However, subsidised roller meal is in short supply and consumers are forced to turn to retailers such as TM Pick and Pay, where it is priced high with 10kg Parlenta going for $229,99.
Mealie meal still continues to be scarce in the market due to corruption in the distribution channels and absence of the green harvests which have increased demand for mealie meal in the country.
Zimbabweans continue to voice their distress at the uncompromising price hikes that haven’t been accompanied by adjustments to their salaries as the rate increases every day.
The scarcity and fluctuating pricing of goods are contributing to the already dangerous levels of food insecurity in Zimbabwe.
In December 2019 the World Food Program announced it would be expanding its operation as 7,7 million people or half the Zimbabwean population was exposed to severe hunger.
The periodic price hikes and unavailability of basic commodities are threatening to plunge more and more Zimbabweans under serious threat.
Government is, however, working to stabilise inflation through a number of measures.
The Reserve Bank of Zimbabwe (RBZ) is on record saying that it expects the country’s year-on-year inflation rate to fall to 50 percent by the end of the year.
