The ManicaPost
Chenai Mutasa Post Correspondent
Zimbabweans continue to wake up to new prices of basic commodities on a daily basis and there has been widespread outcry for Government to intervene as citizens, whose incomes have remained comparably low, continue to bear the brunt.
However, there is need to interrogate the push and pull factors behind price hikes before any measures can be taken if Zimbabwe is to address the problem once and for all.
It should be understood that any regulatory measure to market prices has its advantages and disadvantages and the latter must not outweigh the former.
Last week, the consumer price of bread shot up from a low of $2.50 to a high of $3.50 per loaf which equals a 40 percent increase margin.
The 40 percent increment in the price of bread came against a 29 percent salary rise for civil servants whose pay-outs commenced in the month of April.
The price hike for bread is the latest among a number of commodities whose prices have either doubled or tripled upward in the last couple of months.
While most retailers and manufacturers have cited the black market forex exchange rate as justification for the price hikes,these two parties have also blamed each other for the unreasonable increases of prices of commodities.
Confederation of Zimbabwe Industries (CZI) president Sifelani Jabangwe recently said retailers were exorbitantly profiteering to the disadvantage of the consumers.
“We are concerned with the issue of the retail margins, the prices at which the goods are being offered to the retailer and then the price at which the goods are then offered to the consumer”.
On the other hand retailers have blamed the recent hikes on manufacturers. All the blame game is just revealing that the price madness is not based on logic, but callous businesspersons.
This unjustified madness is also backed by other critical services and goods having received very minimal price adjustments while in some cases they have remained constant.
For instance water and electricity have remained constant over time. Similarly salaries of the workers, especially in the private sector have remained constant.
This has made the debate around price increases very complex as a lot of distortions in the market have become very evident.
Some analysts have argued that the price increases are seasonal and would come to an end in time after the tobacco selling season as the golden leaf would bring into the country the much needed foreign currency.
This is largely because the period of acute shortages, everyone scrambled for the little available hard currency, which has sent rates on the black market sky-rocketing.
The world over, the long history of government-imposed price controls, can attest to unexpected and ruinous consequences from ancient Roman times to the French Revolution and Communist states such as the Soviet Union and China.
For Zimbabwe, history has shown that restrictions on retail prices lead to panic-buying, while previous decisions by the Government to enforce price cuts for basic commodities to counter inflation has the had opposite effect from the intended.
Eventually, shoppers cleared the shelves of supermarkets and retailers say could not replenish their stock arguing that the price cuts did not affect the manufacturers and wholesalers sector.
As the market collapsed and no new orders being placed, their suppliers began considering downsizing, further worsening the economic situation.
This was the case in June 2000 when Zanu-PF Secretary for Administration, Dr Obert Mpofu, was then Minister of Industry and International Trade.
Restrictive measures are less likely to be enough to address the problems created by an attempt to hold prices down hence not the best way to go.
However, there is need for businesses to exercise restraint and self-regulate themselves. While price hikes are normal in business, the margins of increment should be reasonable and within the reach of citizens according to their incomes.
One possible Government intervention might be to offer subsidies to the producers of basic commodities across sectors to keep them in business against and leverage them against the rising black market foreign exchange rates.
The Consumer Protection Bill of 2018 which seeks to provide for Consumer’s right to “consumer education” and the right to“fair value good quality and safety of goods and services” is a step in the right direction which should strike a balance between producer and consumer interests.
Whilst some have attributed the price increases to greed, market indiscipline and economic and political sabotage among other things. At the end of the day, a balance need to be struck between prices increases and workers’ salaries, if ever the country is going to attain the middle income economy by 2030.
