By BRANDON JOSPHAT
THERE are concerns that the recent steep increases in administered prices — those charged by the Zimbabwean government and its agencies — could unbalance the economy and once again see long-suffering consumers facing fresh hikes in the prices of basic goods.
This comes after the prices of fuel, electricity and road toll fees went up significantly, at a time that both the economy and prices of basic goods were experiencing relative stability owing to a raft of measures that were implemented by authorities in the past three months.
It also comes as both black market foreign currency rates and month-on-month inflation have been holding steady, with the Zimbabwe dollar now almost nearing convergence with the greenback on parallel markets.
Economic experts who spoke to the Daily News On Sunday yesterday warned that the latest stiff increases in administered prices could erode the economic gains that had been made in recent months — with business likely to pass on the costs to consumers.
The president of the Confederation of Zimbabwe Industries (CZI), Kurai Matsheza, said the latest increase in administered prices would significantly raise the cost of doing business in the country.
“We have seen some price stability over the past three months and month-on-month inflation has been coming down.
“However, with some of the parastatals increasing their prices, this will militate against bringing down inflation. Thus, the fear is that we might start to see some prices ticking up again,” Matsheza told the Daily News On Sunday.
The president of the Confederation of Zimbabwe Retailers (CZR), Denford Mutashu, also said the new hikes in government charges were likely to affect the economic stability which which had been witnessed in recent months.
“There is a general trend to increase prices in local currency only by both the private and public sectors, which is driven by the supply chain and slight movements in the exchange rate.
“This can lead to an increase in the prices of basic commodities, which we hope won’t happen,” he said.
Economist Prosper Chitambara also said while the statutory price increases were necessary, as they had become uncompetitive, they were going to affect businesses and result in more price hikes.
“The reason for the increases is probably that they are experiencing huge pressures in terms of their input, for example, labour.
“With Zesa, their pricing was sub-economic compared with other regional countries and global peers. Our purchasing power in real terms has been on the low side. So, l am sure they are trying to make sure that their pricing is cost reflective,” he said.
All this comes after both Zesa and the Zimbabwe Regulatory Energy Authority (Zera) reviewed the prices of electricity and fuel — at the same time that the Zimbabwe National Roads Administration (Zinara) also announced further hikes in toll fees.
Consumers will now have to pay $17,21 per unit of electricity for the first 50 units. The figure for between 51 and 100 units has now been increased to $34,50 per unit, while for 101 to 200 units, it is now $60,44 per unit.
For anything above 200 to 300 units, consumers would now be required to pay $86,29 per unit, and those breaching the 300 unit mark will have to pay $103,09 per unit.
With regards to fuel, diesel now costs $1 084,08 per litre, up from $1 057,55 — while petrol has risen to $971,21 a litre from $951,85.
In US dollar terms, the price of diesel went up from $1,69 to $1,73 — while petrol is now pegged at $1,55 a litre, from $1,52.
Motorists are now also paying more in toll fees, less than two months after Zinara announced similar fee hikes.
“Under the new fee structure, motorists will pay $1 300 for light motor vehicles, minibuses $1 950, buses $2 600, heavy vehicles $3 250 and haulage trucks $6 500. Toll fees in foreign currency remain unchanged,” Zinara said when it hiked its charges.
All this also comes at a time that there was some optimism that the prices of basic goods would remain stable on the back of the measures that were being implemented by authorities.
A survey by Daily News on Sunday crews last week in both Harare and Bulawayo had showed that the retail prices of many basic consumer goods, including bread, laundry soap, cooking oil, mealie-meal, flour, salt, sugar, rice and milk had remained relatively stable over the past few weeks despite the ongoing power cuts in the country.
That stability once again prompted shoppers and business representatives to implore authorities to maintain the current economic measures in place credited with steadying the economy.
The spokesperson of the National Consumer Rights Association (Nacora), Effie Ncube, warned then that the current stability would be short-lived if authorities did not maintain a beady eye on the activities of the parallel forex market, which he said had been the main driver of inflation in the country.
“The authorities have managed to reduce the liquidity in the market that was driving the speculative rates.
“There were too many Zimbabwean dollars circulating in the market and the measures that were introduced managed to reduce this liquidity. Secondly, the high interest rates are also making it difficult for people to borrow money.
“These measures have given consumers some relief. But if they are not followed up by additional measures, this is going to be a temporary solution.
“There is a need for the economy to perform and generate foreign currency that will be able to stabilise the exchange rate sustainably,” Ncube told the Daily News on Sunday then.
Matsheza also told the Daily News On Sunday at the time that authorities needed to hold the line on the current economic measures, to avoid upsetting the relative stability that was prevailing throughout the economy.
“The stability is mainly because of the improvement in the forex rate on the parallel market. Now, things will depend on what happens with the exchange rate going forward.
“If the parallel market rate goes up again, this stability will disappear. We hope that the factors that are reigning in the parallel market rate will continue so that prices can remain stable.
“The lack of local currency on the parallel market and the introduction of gold coins has helped to thwart the inflation madness which we saw in the past few months, which has all contributed to price stability,” Matsheza said.
Mutashu also said authorities needed to maintain the current economic momentum, while also helping to create more demand to allow spending by consumers.
“Prices of basic commodities have stabilised owing to both government measures and declined demand. The liquidity situation in the market has affected spending, driving down demand.
“The spending patterns have lately been concentrated on essentials and the hope is to work with the government to work on measures that stimulate demand to avoid serious economic contraction.
“We think this will continue into November when both the private sector and the government pay bonuses, if they can both afford it. Then, more Zimbabwean dollars will be injected into the market,” Mutashu said. – Daily News