Retailers in inflation-ravaged Zimbabwe on Tuesday shunned a new government order to slash the prices of basic goods such as bread and sugar, arguing that such a move would drive them out of business.
Industry and International Trade Minister Obert Mpofu said price cuts of up to 50% had been ordered overnight, claiming a recent spiral in prices was part of a plot to topple the government.
However, economists warned the order would only result in more shortages on the shelves and a strengthening of the black market in a country where the annual rate of inflation is now believed to be nearly 5 000%.
Mpofu said that goods and services whose prices should be reduced include bread, salt, transport, sugar and newspapers, and that retailers should revert to prices charged on June 18.
But a survey of shops in Harare showed most retailers were selling their stocks at the old prices, while some other goods had been increased. There were also signs of hoarding by shoppers worried that goods would soon run out.
”We have no choice but to retain the old prices,” said Justin Sangarwe, a manager at a supermarket in Harare’s Avenues district. ”The prices that have been imposed are uneconomic. You should not be surprised when you come back here to find the shelves empty. It’s unfair that retailers are being punished and accused of profiteering, yet we are merely passing on the prices charged by manufacturers.”
Another irate shop owner, speaking on condition of anonymity, said he had no choice but to defy the new directive. ”I did not study economics, accounts or finance, but I know this does not make sense. The government wants to make us clash with consumers,” he said.
Confederation of Zimbabwe Industries president Callisto Jokonya said the forced price cuts would exacerbate the problems facing manufacturers. ”We are operating in very difficult economic conditions,” Jokonya said. ”Industry is operating at 33%. The government is better advised to address the evils of this nation, which are well-known.”
‘Wayward behaviour’
Mpofu, however, defended the new edict, which came into force overnight, saying the price reversal was a reaction to ”the wayward behaviour by our industries which were behaving in an unscrupulous manner”.
”Government is aware that these price increases are a political ploy engineered by our detractors to effect an illegal regime change against the ruling party and the government following the failure of illegal economic sanctions.”
The economic meltdown in Zimbabwe, where four out of five people now live in poverty, has been accompanied by growing political unrest, which the government has sought to check by banning political protests.
Zimbabwe introduced price controls five years ago to fight a flourishing black market for staples such as cornmeal, cooking oil and bread.
Under the new order, the price the price of a loaf of bread should fall from Z$44 000 to Z$22 000. A packet of sugar will be reduced from Z$70 000 to Z$33 940, while the price of fuel in the few petrol stations that are serving motorists has also been slashed from Z$180 000 per litre to Z$60 000.
Witness Chinyama, a Harare-based economist, described the latest move as ”populist”, adding that it is likely to exacerbate shortages as loss-making manufacturers stop or scale down production. ”Retailers will simply shift to an alternative market which in this case will be the parallel market,” he said.
Zimbabwe’s economy has been on a downturn in the past eight years characterised by world-record inflation and perennial shortages of basic commodities. — Sapa-AFP