Political will panacea to price stability
The time to bury our heads in the sand and give ourselves false hope that the economy is on the mend is long gone as it has become so evident that the economy is now on a freefall — hitting where it hurts most — our pockets.
Recent reports by the Consumer Council of Zimbabwe (CCZ) that the average family basket increased by $6 to $593,55 in October should raise alarm bells and serve as an indicator that we have entered the red light zone.
Price hikes, the world over, are known to trigger mass uprisings and the sooner this issue is addressed the better for our fragile political and economic environment. Prices of basic commodities shot up on September 22 amid speculative social media reports that shortages of basic communities were imminent and to date, most prices have perched at the roof top despite assurances by the powers-that-be that adequate price stabilisation measures have been put in place.
CCZ indicated that the increases were recorded in almost all basic commodities including mealie-meal, tea, cooking oil, flour, rice, salt, onions, cabbage, beef, bath soap, laundry soap and washing powder.
The consumer watchdog attributed the price increases to a number of factors including the fluctuation of fuel prices and multi-tier pricing by retailers.
That prices will continue going up is given in light of what is obtaining on the ground. The ongoing foreign currency shortages have created headaches for manufacturers who are forced to source the scarce US dollar on the parallel market at premiums that are as high as 100%. Given that scenario, manufacturers naturally end up passing the additional cost to wholesalers and retailers who in turn pass it on to the consumers.
Government recently said it would monitor prices on 16 basic commodities, but we believe that monitoring alone is not enough as it is akin to reintroducing price controls. Zimbabweans have bad memories of the 2006 price controls which resulted in most shops running on empty shelves as goods vanished from the market over night. Price controls and shortages go hand in hand. Manufacturers require foreign currency, affordable costs in utilities and an environment conducive enough to attract foreign capital which can be used for retooling. A recent report by the Confederation of Zimbabwe Industries said manufacturers are hamstrung by obsolete equipment, foreign currency shortages and competition from cheap imports.
There is, therefore, an urgent need for government to adopt and nurture a political will to address these ills and avoid shooting the messenger. It’s our contention that the Zanu PF regime won’t consider taking the populist route of reintroducing price controls in the run up to next year’s elections as that will certainly worsen the situation.
In the meantime, consumers should brace for more price increases which will take the cheer out of the festive season.