Promotion minister Mthuli Ncube has triggered a rise in
prices of basic commodities including bread, milk, sugar, soap and cooking
oil.Bread price, the foremost indicator of a price stampede, shot past the US$1
to US$1,30.
The last time bread cost more than US$1 was in 2018 when it
retailed at US$1,10.The price hikes come despite government having reviewed its
tax regime early this month to forestall a price stampede.A snap survey carried
out by NewsDay in Harare and Goromonzi over the weekend showed that all prices
of basic commodities had increased in both Zimdollar and US dollar terms.
For instance, a loaf of bread, which used to be ZWL$7 818,
has risen to ZWL$11 000, a 2kg bag of flour, previously priced at ZWL$22 499
has increased to $26 600, while a 2kg packet of rice has increased from ZWL$21
745 to ZWL$27 599.
Bread is retailing at between US$1,10 and US$1,30 from
US$1; 2kg flour is now US$2,30 from US$2 and a 2kg packet of rice is being sold
at US$2,60 from US$2,20.Sugar is selling at US$3 from about US$2,50, while
cooking oil is retailing at over US$3,50 depending on the brand.
The survey also indicated that most of the basic
commodities were available in most shops, including rural stores, although the
prices varied depending on the type of businesses and area.
In an interview yesterday, economist Prosper Chitambara
said the basic goods price increase was attributed to increased taxes and the
worsening depreciation of the Zimdollar, which is now trading at ZWL$14 500 to
the greenback on the black market and ZWL$9 000 on the official market.
“The devaluation of the currency is a result of the
majority of agencies losing faith in the local units. People will be converting
local currency into hard currency, so demand for the dollar will undoubtedly be
high regardless of the local currency or amount of local currency injected into
the economy,” Chitambara said.
National Consumer Rights Association spokesperson Effie
Ncube said the Zimbabwean economy was experiencing depreciation due to loss of
confidence in the local currency.He said Zimbabwe’s current price hikes were
triggered by inflationary taxes, including toll fees, fuel increases and VAT.
“Taxing our way out of the present problems is not an
option. In actuality, the new and increased taxes were the cause of the current
price increases. These have a strong inflationary effect,” he said.
“Thus, as it stands, the budget was the catalyst for the
soaring costs. The budget, like fuel increases, created panic and grave concern
rather than providing comfort to the market.“Some of the budgetary measures
that are causing prices to go up include toll fee increases, fuel increases
arising from Statutory Reserve Levies, the removal of some products from zero
rating to standard and value-added tax.”
Ncube said economic policies should focus on productivity
to address foreign currency shortages, adding that lack of market confidence in
the Zimdollar and a shortage of foreign currency contribute to instability and
price volatility.
“We need to prioritise productivity in our economic
policies in order to address the persistent shortage of foreign currency. The
policies that have been implemented over the years do not enjoy the confidence
of the market, and our economy lacks stability,” he said.
“Much of the instability and price volatility is caused by
a shortage of foreign currency and lack of market confidence in the
Zimdollar.”Government was forced to review some of the measures introduced
through the 2024 National Budget, with basic food items such as bread, milk,
cooking oil, and maize meal, exempted from VAT.
Other basic commodities such as meat, rice, bath and
laundry soap, washing powder, toothpaste and petroleum jelly have been moved to
standard rating, which means price increases should be minimal.
The Finance ministry announced the changes following
concerns that the heavy taxes could have unintended consequences.Treasury
constituted a technical committee to receive input from representative members
through the Confederation of Zimbabwe Industries.
The committee undertook an impact analysis on the
implementation of some of the measures introduced through the 2024 budget, in
particular with regards to tax compliance en route to the market, mitigation of
consequences of the sugar on health through a special surtax, and a few tariff
lines omitted on exemption from VAT, in order to cover the whole value chain.
Newsday
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