Bread prices in Zimbabwe nearly double as local currency continues to weaken
Harare, Zimbabwe (PANA) - Bread prices nearly doubled on Tuesday to RTGS$3.50 (US$0.76) per loaf as prices of basic commodities continued to soar on the back of a weakening local currency.
The price increase for a loaf of bread was from a previous of RTGS$1.80 (US$0.40) on Monday, as the country prepares to celebrate its Independence Day this Thursday.
“Cabinet received a report from the minister of Industry and Commerce (Mangaliso Ndlovu). He actually presented to cabinet a letter by the National Bakers Association of Zimbabwe (NBAZ) which stated their intention to immediately hike the price of bread without any recuse or consultations with government as is the normal procedure,” Minister of Information, Publicity and Broadcasting Services Monica Mutsvangwa, said during the 12-member Cabinet briefing late on Tuesday.
“Of particular concern to cabinet is the timing of the planned pricing increase which is coming two days before the national Independence Day celebrations. Such a move whether by design or otherwise certainly has the effect of dampening the mood of the nation.
“Furthermore, the unilateral action does not bode well to ongoing efforts by government to engage in dialogue with all stakeholders, business included.”
She said unilateral price hikes, particularly on basic commodities that Zimbabweans could not do without was not with consonance or the spirit of engagement.
"Government therefore calls on the National Bakers Association of Zimbabwe to defer from the planned hike in the price of bread in order to allow for the normal mutual consultations to take place,” Mutsvangwa said.
The increase in the price of bread follows the rise in the cost of flour which nearly doubled over the weekend to RTGS$83 (US$18.04) for a 50kg bag of flour from RTGS$45 (US$9.78).
The hike in flour is a reflection of millers continuing to struggle to get foreign currency to import wheat as Zimbabwe has a 60 percent import dependency on the grain.
Bread is a critical basic commodity in Zimbabwe as seen by the amount of loaves produced each day; about 1, 891, 505, according to the NBAZ 2017 market survey.
NBAZ president Ngoni Mazango was unavailable for comment.
“It’s really unfortunate that the private sector is choosing the path which I believe is not the best. Up to now, we have really been working closely together to identify ways of solving challenges that they are facing but of late we have been observing with concern of course to unilaterally take these moves especially on products that you regard as basic,” Ndlovu said.
“On the issue of bread, we will not take it lying, we have to engage them (private sector). We have made it clear, urged them to defer price increases and come back to the drawing table so that we can find a way around it. We cannot continue to take advantage of consumers like this; it is not good for our economy and not good for their business so we are really worried.”
He said price increases were happening with no justification, despite economists and experts alike agreeing that price increases were unavoidable as between 60 percent and 70 percent of the country remained import dependent.
To improve foreign currency in the country due to its low generation, government introduced the RTGS dollar (local currency) and created an official forex market in February to allow for the local currency to trade for foreign.
However, due to the RTGS dollar not being adequately backed by minerals or reserve foreign currency, this contributed to sellers refusing to part with their foreign currency in exchange for local. To date, the RTGS dollar has devalued by 30,4 percent to RTGS$3.26:US$1.
As such, producers including millers, are continuing to use the parallel market to source foreign currency as it is readily available, albeit, at a premium.
As a result, millers like other producers have increased their prices to recoup the cost of purchasing foreign currency from the parallel market to import, and in this case, import wheat for flour.
"The price of bread is now $3.4 is symptomatic of the malaise affecting this economy. A crises of under accumulation, of zero productivity & low capacity utilization. However, its economic mis-management in the form of deficits, currency distortions, corruption that is central," Zimbabwe's Parliamentary Public Accounts Committee chairperson and former Finance minister Tendai Biti tweeted.
"In 2007 #ZANU forced us into an unprecedented crises of over-accumulation characterized by hyperinflation &social collapse No country that has never been to war has experienced such a crisis. 10 years later without a war #ZANU has sunk us into another meltdown. #Ridculous."
On Monday, the Zimbabwe National Statistics Agency reported that annual inflation as of the end of last month stood at 66,8 percent, on an upward trajectory due to wanton price increases of basic commodities putting the country in hyperinflation.
-0- PANA RA 16Apr2019
