By BLESSINGS MASHAYA
THE Consumer Council of Zimbabwe (CCZ) says it has begun to witness welcome reductions in the prices of some basic goods — including cooking oil and flour — on the back of falling month-on-month inflation and the easing foreign currency parallel market.
At the same time, many Zimbabweans who spoke to the Daily News yesterday, including hard-pressed consumers and businesses, implored authorities to ramp up the measures which have brought back relative economic stability in the country.
But former Finance minister in the short-lived 2008 government of national unity (GNU), Tendai Biti,said the current prices stability being experienced was “artificial” and would thus likely be “short-lived”.
The Zimbabwe dollar continues to recover against the greenback on the black market, with rates currently hovering around $650 to the US dollar — significantly down from the $1 000 mark which was being recorded in July before the government stepped in with fresh policy measures.
“Following various interventions taken by … authorities, some positives are being noted with regards to the stabilisation of the economy.
“We anticipate more disposal incomes for consumers if prices continue declining. As CCZ … we have noted a decline in prices of some select goods … in response to the firming rates on the parallel market, as many retail shops were indexing their prices on this rate .
“In a survey done from 19 August to 26 August, we observed … price decline percentages on margarine (17,7) percent, two litres cooking oil (14,8 percent), flour (2,9 percent), meat (2,5 percent), bath soaps (11,6 percent) and washing bars (17,6) percent,” CCZ acting chief executive, Rosemary Mpofu, said.
The president of the Confederation of Zimbabwe Retailers (CZR), Denford Mutashu, also said prices had begun to stabilise, although shops were experiencing depressed demand.
“The measures instituted by the government are paying off as shown by the local currency appreciating against the US dollar and the surge in demand for gold coins.
“CZR predicts the stability to prevail in the short to medium term … However, there is need to stimulate demand as the current trend may lead to deflation,” he said.
On his part, the president of the Confederation of Zimbabwe Industries (CZI), Kurai Matsheza, said business was encouraged by falling forex parallel market rates.
“If this sustains and an equilibrium is reached, then it’s great for the economy. But with the coming down of parallel market rates, we have also seen aggregate demand falling.
“For us as industry, it is a necessary pain if this is short term and if it will improve the operating environment,” Matsheza told the Daily News.
However, Biti warned that the current stability in the economy was temporary, adding that things would get worse once authorities began paying their suppliers without restrictions.
“Ginya economics doesn’t work. The rates are at a standstill position right now because the government closed down the taps.
“They are not paying contractors. They are releasing little amounts of money at the auction. This is a government with an insatiable capacity to loot.
“They will soon open the taps because people want their money and the looters will also want their money. They will also have to fund Command Agriculture,” Biti said.
“The problem is that if you have an artificial solution, when you open those taps they will flood you. So, once they open the taps, expect the rate to shoot to 1 500.
“They are artificially controlling the rates by not paying people money … but those people have contractual obligations.
“People who supply goods to the government need to be paid their money. Right now debt is piling up and they will finally need to pay them and they will pay them in RTGS,” Biti added.
Economist Prosper Chitambara observed that while there was relative stability in the economy, “it was not a given that prices will come down”.
“I don’t think we are likely to see the prices of goods going down. The fact that the Zimbabwe dollar is appreciating doesn’t mean that the prices of goods will go down. It may offer a bit of respite in terms of inflation.
“Our monthly inflation numbers have been slowing down even though annual inflation also continues on an upward trajectory.
“There are a lot of drivers of inflation within the economy, not just the exchange rate,” he said.
Speaking in the Senate last Thursday, deputy Finance minister Clemence Chiduwa, said authorities were happy to see that the economy was beginning to stabilise.
He said this was largely due to the decision to shore up the local currency against the US dollar.
“We want to promote the use of our local currency. We have said it before that as a country, in order for us to move forward, we need to transact and make use of the Zimbabwe dollar.
“If you check the development that we have done as a country, let us look at … roads … dams … airports, hospitals and clinics, all this is happening because of the use of the local currency.
“I have been speaking to friends and said guys at that time when we were using the US dollar, can you please point to me one project that we did as a country?” Chiduwa told senators.
“Even the black market rate is now around 600 to 650. It is almost closer to the upper bid rates of the auction. It has helped the ordinary man and woman on the street that our prices are now stable,” he said further.
“The major problem that I should state is that we were having incessant price rises or inflation. This inflation, when we looked at it, we observed that it was being caused by too much liquidity in the market.
“So, we then decided to come up with a way of mopping up this excess liquidity in the market, and then … we brought in the gold coin.
“The purpose of the gold coin is two pronged. First, that there are some people who have money and they would want to store value on their money.
“So, those elites who have a lot of money, we then decided that it would be used as a store of value for those with their monies,” Chiduwa added. – Daily News