PRICES shot up by up to 10% yesterday, as suppliers and
manufacturers reacted to the introduction of a 2% tax on money transfer
transactions by new Finance minister, Mthuli Ncube in a move that could hit
consumers hard as retailers warned of further price hikes.
A woman shopping in a retail outlet in Harare yesterday.
Prices of basic commodities shot up in most shops after Finance minister Mthuli
Ncube on Monday announced plans to introduce a 2% tax on monetary transactions.
While taxation on electronic transactions has been on the
books since January 2003 at five cents per transaction, Ncube’s move is seen as
part of government’s efforts to widen its tax base by taxing the informal
sector, whose effect will raise the cost of living for the majority.
Confederation of Zimbabwe Retailers (CZR) president Denford
Mutashu told NewsDay that in light of the new tax rate, suppliers and
manufacturers yesterday morning started sending notices to retailers effecting
price increases of up to 10%.
“So, the citation was on the two cents per dollar tax and
obviously, the parallel market rates also went up today (yesterday). This means
that further price increases are likely if manufacturers, retailers and
wholesalers do not get foreign currency allocations,” Mutashu said.
A snap survey showed that prices of some basic goods at a
number of retail shops in Harare’s central business district, which include
cooking oil, mealie meal, flour, washing powder and rice, had gone up.
“Some of the prices are slightly different from when I came
here the previous day,” one TM Pick n Pay shopper who identified himself as
Tony said.
Shortages of bread were also reported in retail outlets
towards the end of business yesterday.
Rates on Zimbabwe’s black market rocketed after the
announcement.
As of yesterday, a $100 USD note was fetching $230 in
electronic transfer, while the R100 note traded at $14 in bond notes and $16 on
electronic transfers.
“The premium on the US dollar is currently at 130% and this
is lucrative business for us,” a cash dealer, who did not identify himself,
told the NewsDay.
Parallel market rates have been skyrocketing ever since
Ncube opined that he planned to scrap the bond notes, which he said were a
surrogate local currency, “but without the fundamentals to support it”.
On the Zimbabwe Stock Exchange, market turnover jumped over
1 000% to $4,36 million from $358 739,74 recorded on Monday as investors sought
cover in company shares to preserve value of their money.
The market’s total valuation rose 6,53% to $13,24 billion
from $12,43 billion the previous, while analysts said a bull run was likely if
the uncertainty persisted.
“I think it is a knee-jerk reaction and I think people are
still digesting what is coming out of the monetary policy and the fiscal
measures. But, it is those initial moves that show that investors are seeing
value preservation in the shares,” the Stockbrokers” Association of Zimbabwe
vice-chairperson Arnold Dhlamini said.
“It also looks like a lot of liquidity wanted to find a
home quickly, but for government, what it wants to achieve is to remove a lot
of liquidity from the market.” Newsday
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