Consumer spending declines
Prices of goods have risen by between 25 and 75 percent
RETAILERS have said consumer spending has declined considerably in recent months, as Zimbabwean consumers cannot afford to maintain spending with the high prices of goods and services.
Prices of most goods have risen by between 25 and 75 percent over the last few months with the trend notable across leading retailers and wholesalers in the country.
However, consumers have struggled to keep pace with the wave of frequent, and in instances, wanton price hikes, as the majority of employers have not increased salaries.
The Zimbabwe Congress of Trade Unions (ZCTU) says the spiralling cost of living justifies upward increase in the minimum wage to US$600 (RTGS$1 800) to cushion workers although there is not that sort of money available.
Most retailers admitted to increasing prices, but said this was in response to prices rises by manufacturers.
However, a handful of major domestic manufacturers is understood to have assured the Government that they will not and have not increased prices of their products.
A survey by The Herald Business of leading supermarkets and wholesalers that include Pick ‘n Pay, OK Zimbabwe and Mohammed Mussa revealed common thread of large increases in the prices of most if not all basic commodities.
The price increases cut across the majority of basic commodities such as mealie-meal, sugar, rice, flour, bath soaps and laundry soap, according to a survey by The Herald Business.
Roil cooking oil is selling at $12,99 for a 2l bottle, Ma-Hat-Ma rice 2kg — $8,49, Huletts sugar $2kg — $5,29, Gloria self-raising flour $2kg — $5,49 Happy sky sanitary wear — $2,99,Washing powder (Sunlight) 1kg — $11,79, Lulu toilet paper 4pack 1ply — $4,49, jade bath soap —$1,99 and Stay soft — $17,99.
Prices of similar goods from some manufacturers are lower than the prices or traditional brands, and shoppers now shop around.
A shopper, Luckmore Mauro, commenting on the price hikes over the last few months said he had changed his buying habits to stay within the confines of his static income.
“I am roaming around trying to buy groceries for my family but it’s proving to be a difficult and stressful process. The prices are unbelievable,” said Mr Mauro.
“I don’t know what is happening; I am no longer buying products that I used to buy. We are now buying only the cheapest products that fit into my budget,” he said.
Notably, most retailers and producers of basic have increased prices in tandem with the wild swings in parallel market rates of foreign currency, where they buy forex.
A number of manufacturers have had to resort to buying foreign on the black market, as they could not get much from allocations by the Reserve Bank of Zimbabwe.
Authorities are also on record admitting that in instances, price increases reflect the negative impact of the pass through effects of foreign currency premiums on the black market.
But some producers who have no significant foreign currency input in their processes have taken advantage of the prevailing situation to effect wanton price hikes.
Confederation of Zimbabwe Retailers (CZR) president Denford Mutashu said there has been a notable decline in consumer buying, which was caused by high prices.
He attributed the fast changing consumer behaviours to the mismatch between prices of commodities and consumers low disposable incomes.
Most firms have little latitude to adjust salaries, as some are battling to simply get by or stay afloat due to the difficult, but improving operating economic environment. “There is a mismatch between prices and the rate at which incomes have been eroded. It is a serious cause for concern because there has been a notable decline in demand of goods.
“You have a situation where sugar suppliers are increasing prices of the commodity by 120 percent in a space of a few months; it means the majority cannot afford.
“Over the past few weeks prices have gone up by at least 25-75 percent on all retail products while prices of household electrical goods have gone up by 200 percent.
“The sad part is that all these pricing increases are being swallowed by the consumers.
“Consumers are opting for substitutes as much as possible and unfortunately some of the substitutes are being smuggled into the country. We need to continue to explore robust import substitution programmes which are hinged on a vibrant export programme,” said Mr Mutashu.
Mr Mutashu said his organisation was consulting with various stakeholders in the country to try and make sure that the parties reach a consensus on their pricing matrix.
“We are engaging the confederation of Zimbabwe industries, Zimbabwe National Chamber of Commerce and the Grain Millers Association of Zimbabwe to agree on the price structures and get to a point where consumers are not ripped off,” he said.
Confederation of Zimbabwe Industries president Sifelani Jabangwe said producers had increased prices on the back of rising costs, for instance prices paid to sugar cane producers.
“(Producers) they are also saying fuel has gone up and also The National Railways of Zimbabwe has increased its transportation costs by as much as 120 percent,” he said.
“Prices of imported commodities have gone up because while Government has availed the inter-bank trading platform, producers and retailers are finding it difficult to access foreign currency so they end up going to the parallel market,” Mr Jabangwe said.
The forex premiums were contributing to rising prices of goods. Mr Jabangwe said CZI was discussing with producers and Government to find ways of taming the problem.
Government on Tuesday last week raised serious concerns over continued price hikes, which saw prices of most basic goods go up by over 50 percent in the past month.
Economic analysts said the price madness had moved most basic goods out of the reach of many as salaries for the majority of the workers had largely remained unchanged.
Zimbabwe’s inflation, at 59,39 percent as at the end of March, has also been going up in recent months.
But some suppliers base their pricing on the movement of the parallel market exchange rate, resulting in increases multiple times higher than inflation.