A festive season price rally witnessed the prices of some
basic goods and services going up between December and January, prompting
authorities to launch an investigation into the pricing turbulence.
Preliminary findings from the ongoing official inquiry show
that increased demand over the festive season holiday, coupled with depressed
production during the Level Four national lockdown, were behind the pricing
madness.
In addition, increases in the utility rates and fees across
the economy and the absorption of these costs by business have reflected in
price increases after the costs were passed on to the consumer.
Reserve Bank of Zimbabwe governor Dr John Mangudya told The
Sunday Mail that the price increases witnessed over the last two months were
largely driven by strong demand and depressed production.
“The prices of some commodities such as cooking oil shot up
due to increases in the price of Crude Degummed Soybean Oil (CDSO) on the
international market,” he said.
“There was an increase in the prices of goods in December
and January because of the festive season; there was a high demand against low
productivity.
“That is why we are concentrating on increasing
productivity to ensure there is a balance between demand and productivity. There
was also an increase in the cost of power and fuel.
“We are, however, positive that prices are going to
stabilise and this is evidenced by the month-on-month inflation for the month
of February, which stood at 3,45 percent.”
Dr Mangudya said the anticipated bumper grain harvest will
increase the availability of most basic commodities.
Prices had already begun stabilising over the last few weeks with the
month-on-month inflation for February shedding 1,98 percentage points to 3,45
percent, on the January rate of 5,43 percent, according to the latest data from
the Zimbabwe National Statistics Agency (ZimStat).
Industry and Commerce Deputy Minister Mr Raj Modi said the
ongoing probe will be concluded soon. “Yes the investigations have started and
they are ongoing,” said Mr Modi.
“They are set to be concluded soon so that action is
taken.”
While the country had enjoyed notable price stability since
the introduction of the foreign currency auction system in June last year,
there has recently been price increases across products.
Authorities suspect that the price instability could be a
result of arbitrage and opportunism by a few players allowed to open during the
lockdown period.
Confederation of Zimbabwe Retailers (CZR) president Mr
Denford Mutashu said the national lockdown had affected the manufacturing
sector resulting in low production.
He said manufacturers affected by the lockdown require a
stimulus package from the Government in order to increase production.
“Although the lockdown curbed the spread of the virus, it
was not pro-business especially to the small producers,” said Mr Mutashu.
“This created a monopoly of sorts and to some extent
increased the prices of goods because productivity was subdued.
“In addition, the absence of stimulus packages for the
manufacturing sector during the lockdown also contributed to low productivity,
which led to the high demand for goods against low supply.
“We have also seen an increase in local authorities’ rates,
electricity and fuel which have fuelled the increase in prices. Some of our
members have seen local authorities’ rates going up by more 1 000 percent and
this has affected business.”
Economist Professor Gift Mugano said low production during
the Covid-19-induced lockdown affected pricing. He said the easing of lockdown
measures will realign prices with reality. “The lockdown has contributed to low
productivity,” said Prof Mugano.
“Although there has been manufacturing and movement of
goods, it had been subdued due to the lockdown. Once it is eased, we anticipate
an increase in production and movement in goods.”
The Government announced an investigation into the price increases last week, promising to take action against errant businesses that are profiteering. Sunday Mail
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