The Sunday News
Judith Phiri, Business Reporter
PRICES of basic commodities continue to stabilise in light of measures put in place by Government to tame inflation which was stoked by unscrupulous business tendencies, rent-seeking behaviour and forward pricing.
This comes as Government has adopted tough monetary policy measures targeting speculative exchange rate manipulators who were previously fuelling black-market volatility that eroded the value of the local currency.
Economic commentators and industry have commended the stability of prices stating that it was a positive indicator that ushers in economic growth and slows down inflation. In August, month-on-month inflation dropped to 12.4 percent from 25.6 percent in July in response to corrective macro-economic policy measures being implemented by Government, which have started pushing the cost of living downwards.
In an interview, an economist with the National University of Science and Technology (Nust) Department of Banking and Investment Promotion, Mr Stevenson Dhlamini said measures being taken by Government had in turn slowed down the black-market rate which in turn necessitated the continued decrease of prices of basic commodities.
“The economic measures put forward by Government have proved to have a stabilising effect on the national economy as they managed to arrest the parallel market rate from whose premise prices were being hiked. The measures have forced down the parallel market rate which in turn has also forced down the prices of basic commodities which are also stabilising.”
He said another contributing factor was tightened monetary policy to arrest resurgent inflation which has also brought down inflation resulting in a positive impact on prices stability. Zimbabwe National Chamber of Commerce (ZNCC) Matabeleland Chapter chairman Mr Mackenzie Dongo said price stability was a good economic indicator as it helps businesses in planning and also brings the issue of forward pricing to a halt which has been hurting the exchange rate.
“It’s a good thing that also prices of cost input like fuel has also remained steady meaning production costs can now be controlled. As business we expect to see prices going down as opposed just to remaining stable as this will stimulate consumptive spending that comes with a lot of downstream benefits,” said Mr Dongo. Consumers have also welcomed the reduction of prices of basic commodities saying the raft of measures taken by the Second Republic were now paying dividends. Consumer Council of Zimbabwe (CCZ) Matabeleland regional manager Mr Comfort Muchekeza said there was a need for the prices to continue going down.
“There is a need for the prices to continue going down but we are also happy with the current trend of price stability. Consumers can now plan ahead how they can spend their income unlike before when prices could continuously go up in a short period of time.”
The Government has moved swiftly to curtail money supply growth and taming rampant parallel market indiscipline, blamed for fuelling inflation and exchange rate volatility.
The official rate of the USD to the local currency has been steadily closing in on the black market rate in recent months. The RBZ auction rate was at $613 to US$1 last week, while the black market rate was between $700 and $750 to US$1. The interbank rate was slightly higher than the auction rate, further closing the gap to the black market.
