Advocating for price controls as commodity prices soar

The Chronicle

Nqobile Tshili/Patrick Chitumba, columnists
Bulawayo residents have called for government controls as commodity prices become increasingly out of reach for the majority of citizens as retailers have adopted different exchange rates.

In recent weeks, commodity prices have soared amid fears that this will be influenced by parallel market exchange rates and profits.

To protect consumers from price shocks caused by geopolitical developments in Europe and local speculative behavior, the government recently suspended duties on basic products, including cooking oil, sugar and corn flour.

While the official rate for the US dollar to the Zimbabwean dollar is $1:$308.5, supermarkets such as Greens, Cover and Oceans have priced using rates between $1:$400/$450 .

Whereas in the past shoppers could simply walk into any store and purchase groceries as there was virtually no price difference from store to store, the situation has changed due to price anchor using black market rates.

For example, products like 1 kg of powdered milk are sold between $1,500 and $4,000 depending on the store.

At the OK supermarket yesterday the rate was set at 1 USD: 298 USD and in Zapalala it was 1 USD: 400 USD; at Choppies US$1: $370 and at Greens US$1: $420.

Cover Supermarket located along the 12th Avenue extension between Fife Street and George Silundika has its products priced in US dollars and rand only, although it accepts local currency at US$1 or $450, the same than Oceans Supermarket.

OK and Choppies had the lowest prices for 2kg rice at just over $600, while Pick n Pay, Greens and Spar were selling the same price at $800.

The cheapest 2 liters of cooking oil were sold for $2,100 at Choppies, while at stores such as Zapalala and Greens they were $2,800.

A 10kg packet of Amandla roll flour was the cheapest flour on the shelves as it sold for $1,900 in most stores.
Members of the public have expressed concern over the steady rise in commodity prices, saying there is a need for government intervention.

Residents said commodity prices were rising and wages were stagnating.

Mr Mhlupheki Sibanda, who lives in downtown Bulawayo, said the price hikes were eroding incomes.

“I worry about rising prices for most commodities. There is nothing affordable, we are struggling to survive and there is no money. It is necessary that the government intervene because we do not see things changing. As for me, I am more worried about young people, they will not even be able to buy properties,” Mr Sibanda said.

Mrs. Nomusa Nkosi expressed concern that prices have doubled from last month.

“I just bought some goods and the prices have gone up so much. I remember we were talking with my husband that the bath soap we bought last month for $250 is now $500. All commodities increased. A solution must be identified to solve this problem. Our wages are not going up but the prices keep going up,” Ms. Nkosi said.

The Consumer Council of Zimbabwe has denounced the price mania, saying consumers need to be more vigilant when shopping. CCZ spokesman Mr. Chris Kamba said rising commodity costs indicate profit.

He said a family of six now needs $120,000 for food a month.

“From the consumer’s point of view, price differentials are good and bad, good insofar as they encourage competition between players. On the other hand, they highlight the greedy and profiteering tendencies of some actors in the value chain,” Mr. Kamba said.

He said CCZ has since created social media groups where they advise consumers where they can get affordable products.

The Confederation of Zimbabwe Retailers (CZR) chairman, Dr Denford Mutashu, said the price hikes are partly caused by manufacturers demanding payment in foreign currencies.

On the right, the President of the Confederation of Zimbabwe Retailers (CZR), Mr. Denford Mutashu

“Retailers end up buying foreign currency on the black market because producers currently do not accept payment in local currency. So, as retailers, it is difficult to make a profit if we buy in foreign currency and then sell in local currency. Consumers want cheap products, but the availability of foreign currency affects the retail price and that is why there are price disparities,” Dr Mutashu said.

He said that to stop the price hikes, the country must increase its production.

Confederation of Zimbabwe Industries (CZI) Chairman Mr Kurai Matsheza said demand for foreign currency was fueling the price rises.

President of the CZI, Mr. Kurai Matsheza

“Companies access the foreign currency partly from the auction and also from the parallel market, because we all know that the auction does not give a 100% requirement. So a mixed level of forex is different from company to company and therefore different rates between retailers,” he said.

Matsheza said the impact of the Russian-Ukrainian conflict was also affecting commodity prices in the country.

“Commodities such as wheat, cooking oil, gas, fuel and oil are among the products that have been affected. As you may know, the global supply level of both countries is at 40% and a 40% disruption is a huge gap.

The longer the conflict lasts, the more damage will be felt by the global economy. Zimbabwe is therefore caught in this situation because we depend on the importation of these products. Therefore, as a country, we are not immune to these shocks,” Mr. Matsheza said.

James V. Hayes