Relief as prices of basic commodities continue to fall
Trust Freddy Herald correspondent
The measures being taken by the Government and the Reserve Bank of Zimbabwe ( RBZ) to tame inflation and stop the black market continue to bear fruits as most producers continue to reduce prices that were shoved up to match expectations of what the black market might demand in a couple of months.
Retailers are generally passing on the lower prices to their customers and are earning their own foreign currency as customers using US dollars now get a better deal from retailers than from the black market.
The “till rate”, the mid-rate in the interbank market plus the 10 percent allowed to retailers, now offers better value than the street dealers buying US dollars once the transaction tax and transaction charges are added in.
This has resulted in a lot more people possessing US dollars using them directly in shops rather than selling them to the dealers handing around outside the shops.
At the same time banks now offer slightly more in Zimbabwe banknotes than the street dealers.
At the same time some prices are falling in US dollar terms, without any exchange rate pressure, with a number of Government measures now seeing bread increasingly fall to US$1 a loaf.
Bakers Inn has led major bakeries in reducing bread prices to US$1 per loaf from US$1.25 as for the first time in three years.
OK Zimbabwe has slashed the price of a standard loaf from Z$748 to Z$690, which is the “till rate” for US$1.
The price of cooking oil is now ranging from $2 649 to $2 799 depending on the shop, down from the previous $3 999 while a litre of fresh milk remains at $899.
A litre of Bally house drink has also been reduced to $1 849.99 from $1 969,99 while a kilogramme of salt has remained at $399.
Buoyed by a stabilising Zimbabwe dollar, the bread price is expected to continue fall ,with authorities predicting a winter wheat crop of roughly 380 000 tonnes, which is 20 000 tonnes higher than the national requirement and so Zimbabwe reaches self-sufficiency in wheat for the first time in history. This will mean that the millers will be buying all requirements from the GMB, rather than importing, allowing a great deal of stability in pricing.
To cushion consumers with affordable flour and bread, the price of wheat to millers by the Grain Marketing Board will be reduced by 4,4 percent from US$680 a tonne to US$650 a tonne, payable as 33 percent in US dollars and 67 percent in local currency using the interbank rate.
Government started supplying millers with cheaper wheat and wheat flour imports will be suspended, as the country anticipates self-sufficiency in domestic requirements.
According to the Zimbabwe Energy Regulatory Authority (Zera), the latest price of diesel is US$1,69 per litre from a peak of US$1,88 while petrol is US$1,52 from a peak of US$1,77. Zera’s pricing model uses the landed cost of fuel as the starting point, and falling global prices helped, plus the Government reducing the taxes on fuel.
Consumers have welcomed the reduction of prices of basic commodities saying Government must continue to implement tight monetary policy as raft of measures that were taken continue to pay dividends.
“At least our hope has been rekindled by the way prices of basic commodities are going down, almost every week we are witnessing a reduction in fuel prices. Therefore, we are urging retailers and manufactures to reduce prices of basic commodities since ,” said Mr Richman Gavaza of Ruwa.
While fuel prices are only a small percentage of the final prices of most products, many manufacturers claimed higher prices led to their sudden price jumps and now are caught when consumers expect similar falls.
An ecstatic Mrs Lovejoy Marape, who was shopping in the capital hailed the Government for pouncing on economic saboteurs who have been fuelling inflation.
“A few months ago prices have been going up each and every day but we have seen a dramatic u-turn where we are seeing pricing of goods going down twice or thrice within a week.
“We are very happy , it shows that the supply is now surpassing demand and we hope that the prices will continue to go down,” she said.
Another Harare resident, who requested anonymity said very soon all money changers will disappear from the streets as they are already feeling the heat.
“I am even thinking of starting another business because we are no longer making profits, there has been a surge in the demand for zim dollars, there are only very few people who are looking for US dollars,” he said.
Growing agricultural harvests and production are seeing demand for foreign currency at the auctions falling, reaching US$10,4 million this week.
The prudent monetary policy has been buttressed by an equally robust fiscal policy which has seen Treasury getting tough on major Government suppliers and contractors through tightening controls in payments.
Introduction of gold coins , drastic reduction in the price of fuel , implementation of a tight monetary policy aided by corresponding fiscal measures , have combined to tame inflation.