No end in sight to citizens’ pain … as life gets harder, prices of basic goods hit new highs

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Tendai Kamhungira
DEPUTY CHIEF WRITER
kamhungirat@dailynews.co.zw

©️   THERE appears to be no end in sight to the economic pain of ordinary Zimbabweans, with the prices of basic consumer goods shooting up further yesterday — following a shocking fuel price hike of 150 percent on Tuesday night.

Surveys by Daily News crews in Harare, Bulawayo and other urban areas yesterday showed that many retail outlets had already adjusted their prices upwards significantly — in response to the latest fuel price hike and the country’s new foreign exchange rates.
This comes after the Zimbabwe Energy Regulatory Authority (Zera) announced the morale-sapping new prices of fuel on Tuesday, which resulted in a litre of petrol jumping up from $28,96 to a staggering $71,62 or US$1,28 — while diesel shot up from $24,93 to $62,77 or US$1,09.
It also comes as there has been massive confusion this week, following the decision to allow retail shops to start charging their goods in both American dollars and the local currency.
The spokesperson of the Consumer Rights’ Association, Effie Ncube, told the Daily News yesterday that the latest fuel price increase was a recipe for disaster which would have far-reaching consequences on people’s lives and the pricing of goods and services in the country.
“The implications are huge. Any price increase on fuel has inflationary consequences. This will affect the cost of food, mealie-meal, transport and everything else.
“It has serious implications at a time when many people are unemployed and the economy is in bad shape,” he said.
Ncube also said the country needed to introduce a stable currency such as the US dollar or the South African rand in the short term, as the local currency was now “worthless”.
“We also need to address the political situation in the country. The country’s problems are a result of the political challenges we are in.
“So, once we address the political situation through reforms, we can then be able to address corruption and the other economic challenges,” he said.
The executive director of the Consumer Council of Zimbabwe, Rosemary Siyachitema, said while her organisation was still assessing the impact of the latest fuel price hike, the general understanding based on previous experiences was that this would affect the prices of other commodities and services.
“It’s something that we are still researching on, but we usually see that each time fuel prices increase, the prices of commodities also increase,” she told the Daily News.
Analyst and University of Zimbabwe lecturer, Eldred Masunungure, said that the new fuel prices would pour more misery on ordinary people, who always bore the brunt of the government’s poor decisions.
“It (the fuel price increases) will add to the misery of consumers. It is going to further impoverish the ordinary men and women.
“Business is struggling and will transfer this burden on consumers. At the end of the day, it will be the consumer who will suffer.
“The poverty datum line should be more than $10 000 now for a family of five or six people. This will also add pressure on many companies,” Masunungure told the Daily News.

 

“The problem may appear to be economic, but it’s political. They (the government) are diving into the symptom, instead of cracking the problem. It’s a political problem which needs a political answer.
“Last week they awarded civil servants a Covid-19 allowance in US dollars and a 50 percent salary increment, but this exploded into a nurses’ strike.

 

“Even if they had increased the salary by 100 percent, it would still amount to nothing,” Masunungure added.
The president of the Confederation of Zimbabwe Retailers, Denford Mutashu, said prices naturally responded to movements on key cost drivers such as fuel.
“The coming in of the foreign currency auction system may have an impact of pushing prices upwards in the short to medium term.
“The hope is that the foreign currency situation and exchange rate will stabilise,” he said.
A similar fuel price hike in January last year caused wild protests across the country, resulting in the killing of 12 people by security agents.
Economic experts said last night that one of the problems was that Zimbabwe’s fuel had over the years been among the cheapest in the region — creating arbitrage opportunities for some people.
Top economist John Robertson said that “wrong pricing” of fuel had caused serious fuel shortages in the country.
“If the market-related exchange rate now being established brings about stable prices for fuel and other imports, inflation will start going down after a few months, but wages will have to rise to restore purchasing power.
“If the currency auction average settles at around 60 to one, costs will be lower for imports and prices should come down. We have to hope that the auction rate stabilises very soon,” he said.
This comes as there was also massive confusion on Tuesday, as retail shops were meant to start charging their goods in both American dollars and the local currency.
Instead of making life easier for long-suffering consumers, the new system created its own new set of challenges — with many retailers completely removing prices from their shelves, while some small shops were rejecting the Zim dollar altogether, in anticipation of the new foreign exchange rates stabilising.
It also comes after under-fire Finance minister Mthuli Ncube signalled Zimbabwe’s imminent return to dollarisation last week — after he awarded civil servants and State pensioners allowances in US dollars — despite him having reintroduced the Zim dollar only last year.
Veteran economist Tony Hawkins said the retail confusion that had been witnessed had been brought about by uncertainty regarding where the exchange rate would be pegged in the next few days.
“Retailers are anxious as they are not sure what is going to happen after the launch of the new exchange system. That is the reason why they are removing price tags and withholding their products.
“The government has said that the introduction of the new exchange rate system will stabilise the exchange rate and also put to an end speculative tendencies.
“However, this has not inspired confidence in the economy and it is going to be difficult to achieve these goals,” Hawkins told the Daily News.
“This is because the new exchange system will be changing the rate on a weekly basis and retailers will still be left anticipating how the rate will perform in the coming week.
“This leaves them in a conundrum of whether to charge their goods using last week’s rate or to speculate on what next week holds,” Hawkins further told the Daily News.
“Ultimately, what is happening here is the road to full dollarisation, and unfortunately our government is too embarrassed to admit that we are dollarising.
“Having a dual pricing system is just a way of slowing down what is inevitable. But as we have seen, the market is already rejecting the local currency in favour of the US dollar,” Hawkins added.
Last week, the government all but signalled a return to dollarisation after Ncube awarded civil servants and pensioners allowances in US dollars.
The decision came as the country’s economy is rapidly approaching the horrors of a decade ago when the
Zimbabwe dollar was decimated by hyper-inflation — with the prices of most basic consumer goods now out of the reach of ordinary citizens.
It also had similarities with how the then administration of the late former president Robert Mugabe introduced the stability-inducing multi-currency system in 2009.
Then, Zimbabwe binned its worthless currency and introduced the multi-currency system which was anchored by the US dollar.
Despite this system having served the country well for more than a decade, Ncube rattled the markets in June last year when he prematurely and ill-advisedly ended the local use of the US dollar and other foreign currencies.

 

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