prices.jpgBy Stanley James

 

The increase in the prices of basic commodities in the country towards the festive season continues to raise concerns from stakeholders, who say the latest pricing regime is threatening efforts to stabilise the economy.

 

While the business community has given the firming of the rand as an excuse, some analysts now doubt whether the local business community is concerned with consolidating economic gains achieved so far or are after just profiteering.

 

The introduction of the multiple currency system in February 2009 by the then Acting Finance Minister, Cde Patrick Chinamasa had raised hopes for price stability for a nation which had experienced hyperinflationary conditions since illegal sanctions were imposed on the country at the turn of the millennium.

 

Given the fact that the major currencies currently in circulation within the economy are the South African Rand and the United States Dollar, there has been a remarkable progress in terms of stable economic conditions.

 

However, the way business has been operating has raised eyebrows among the general populace.

 

The retail industry in particular has hiked prices of basic commodities citing the firming of the South African rand against the US dollar as the reason.

 

However, what is worrying is that the official figures are reflecting that the South  African  Rand has in the past few weeks dropped by 1,9% against the US dollar and this change has not translated into price decreases.

 

retailers.jpgAn economist, Mr Isaac Kwesu says it is in the interests of the economy for retailers to come up with real pricing models apart from taking advantage of the exchange rate disparities between the rand and the US dollar in increasing prices.

 

“What one should know is that prices adjustments turn to leg behind the exchange rates,” said Mr Kwesu.

 

But taking into account the fact that most of the products in the retail sector are imported commodities, is it a clear sign of imported inflation or does it really mean that the business community is also factoring import charges or costs in the pricing models?

 

An economic commentator, Mr Jonathan Kadzura begs to differ, arguing that since Government has continuously suspended duty on imported goods, the costs of importing is very low to an extent that it cannot be used as an excuse for price increments. 

 

“We are using a currency that is not our own, we do dot have a sovereign currency and therefore our inflation is not controlled locally, it follows the trends of the rand and the US dollar, so it is not a local variable we should look at,” said Mr Kadzura
 

While disposable incomes are still very low in comparison with the average monthly Poverty Datum Line (PDL) for a family of 5, which is hovering at around US$400, the  local consumers are calling upon Government to introduce policies so as to remove price distortions.

 

“The government should do something to stop retailers from profiteering while ripping us off,” said one consumer.

 

In its latest submissions to Government, the retail industry has attributed the price increases to prohibitive production costs in the form of rentals, water bills and electricity tariffs among others.

 

However, relevant Government ministries are assessing the justification of such reasons.

 

While the economy has made significant progress in the form of single digit inflation rates, improvement in capacity utilisation and positive real economic growth rates, the sudden wave of price increases has emerged as an enemy of economic revival.

 

Most businesses in the region are slashing prices in preparations for the festive season while maximising on large volumes and high turnover.

 

Surprisingly, Zimbabwean business people would rather push prices up and make a killing out of few products. One wonders where those ethics were learnt from.