Retailers agreed, saying the only effect they saw from the
increase was better business as a very large block of consumers now had more
money to spend.
The Consumer Protection Commission cannot see the increase
triggering price rises and agrees with the retailers that the measure will be
totally positive in increasing business.
Responding to speculation that prices were north-bound
following a 50 percent salary increment for Government workers, Prof Ncube
disagreed.
The exchange rate is a major factor governing inflation but
he said the official market constituting around 95 percent of foreign currency
trading in the country is stable.
The far smaller black market was therefore not a worrying
factor when looking at inflationary pressures.
“We as Government follow the official exchange rate. This
is the exchange rate that is coming out of the auction process, which is a free
market. That easily accounts for 95 percent of all the foreign currency trading
in the economy. So we cannot base our analysis on the alternative markets.
“When we make decisions about supporting our hard-working
civil servants, we follow inflation. You have seen that inflation is dropping
on both a year-on-year and month-on-month basis and we expect that by year-end
it will be anywhere between 25 to 35 percent year-on-year with month-on-month
below three percent.
“Wages and salaries anywhere in the world are set on the
back of inflationary expectations, which are headed downwards in Zimbabwe.
Inflation is what erodes salaries. That is what you are confronted with in the
shops. So it is about inflation.
“Inflation is going down. It is going the right way. It
shows that our policies are working. The exchange rate is stable, and the
companies will tell you that they are now planning better because there is less
price instability and business is booming and we are also positive about
economic recovery this year.”
In an earlier interview, Prof Ncube talked about the newly
introduced $50 note, assuring that it will not have any negative impact on the
economy.
He said it has no impact, explaining that when the
authorities introduce notes on the market, they cancel the equivalent held in
the RTGS system at the Reserve Bank so any notes entering the market do not
increase money supply.
“It has no impact. The way we introduce the note is you
swap your RTGS for cash, and the RTGS once we take it at the Reserve Bank we
then cancel it. We actually remove it and then substitute it.
“So there is a zero net effect on the value of the
currency, and the currency remains stable and protected. It has zero impact on
inflation,” said Prof Ncube.
The Confederation of Zimbabwe Retailers (CZR) president Mr Denford Mutashu said shop owners were not anticipating any inflationary effect from the recent salary increases.
“We anticipate that it will increase effective demand on
the market. Civil servants account for about 60 percent of the customers and if
they are well paid it will improve the economic demand. We do not anticipate
that the latest increment will have any inflationary effect. The market has
been struggling to match the current pricing regime.
“As business, we welcome the civil servants’ pay rise, and
like I said we do not expect it to have any inflationary effect,” said Mr
Mutashu.
Consumer Protection Commission chairperson Dr Mthokozisi
Nkosi weighed in saying they anticipate an improved purchasing power of the
civil service.
“Over the years, we have seen a trend where each time there
is an increment on the salary of civil servants, it is followed by an unjustified
general price increase. But now we expect that consumers can get a breathing
space. The measures put in place by Government seem to be water tight and are
not prone to abuse.
“We want the general public and the civil servants in
particular to have more purchasing power through increased disposable income.
This will increase aggregate demand which will trigger and stimulate economic
activity,” said Dr Nkosi. Chronicle
0 comments:
Post a Comment