Holiday spending upsurge triggers price increases
PRICES of some basic goods have significantly increased since the start of the festive season as retailers took advantage of increased holiday spending, a new Government survey shows.
The Department of Policy Research and Consumer Affairs under the Ministry of Industry and Commerce did a survey of price movements and availability in Harare and Midlands provinces of the 16 monitored commodities including maize-meal, sugar, cooking oil and washing soaps, which revealed an increase in prices for selected goods.
Despite an increase in prices of selected products, commodities were generally available, the survey noted. While the surveyed outlets are formal, a snap survey by The Herald Finance & Business showed that prices at informal outlets, commonly known as tuck shops that predominantly charge in US dollars, were generally stable.
Festive seasons are usually characterised by huge consumer spending and retailers often take advantage by increasing prices.
“The survey noted a significant price increase on some of the basic commodities such as cooking oil and meat (beef and chicken) in Harare Central Business District as compared to last week,” said the reports for the week ending December 24, 2020.
“(However), the supply of commonly used basic commodities are experiencing stability as witnessed by their presence on (supermarket) shelves,” the survey added.
Prices of roller maize meal increased from around $476 to $559,99 per 10kg packet depending on brand and retail outlet while self-raising flour increased by an average of 2,18 percent. Washing powder (500g OMO) increased by 19,7 percent while LP Gas rose by 18 percent, according to the report.
Some analysts say the prices were likely to fall as increases were largely triggered by huge holiday spending.
“There is no reason to think that this will continue . . . we expect stability that we have witnessed over the past five or so months to continue prevailing,” said Carlos Tadya, a researcher with a local think tank.
Some critics, however, expect widespread price increases on the back of the increase of exchange rate on the black market widely used by unregistered retailers in pricing commodities.
The country has witnessed a general price stabilisation during the second half of the year due to increased local production and a firm exchange rate. Some companies took advantage of trade restrictions resulting from Covid-19 pandemic and raised production with the industry registering increased capacity utilisation.
On the other hand, the launch of the Foreign Currency Auction System improved access to foreign currency for importing raw materials.
“The Ministry of Industry and Commerce working together with industry has managed to tame price instability that had characterised the first half of the year,” Industry and Commerce Minister Dr Nzenza said.
“Industry has responded to the Ministry’s Local Content Strategy as witnessed by increased local sourcing of raw materials.
“The commercial sector also had a positive response to the Buy Local Strategy, which resulted in more than 80 percent of goods on the shelves of most retailers being locally manufactured.
“Government will therefore continue implementing the import substitution strategy as it is critical for increased local production, employment creation and stabilisation of prices on the domestic market.”
Dr Nzenza said the foreign currency auction system introduced by the Reserve Bank of Zimbabwe has played a critical role in the stabilisation of prices.
On average, industry requires US$100 million per month to import raw materials and the auction system has been sufficient to allow access to foreign currency to fund imports.