By Kundai Marunya
ECONOMIC saboteurs and price cartels have been blamed for the recent spike in inflation for goods and services in shops that trade in ZiG. Price cartels manipulate market conditions through collective pricing strategies that harm consumer interests by keeping prices artificially high and restricting competition among member firms. There are individuals and businesses that engage in price fixing, where members of the cartel agree to set prices for their products or services at a certain level, typically above the competitive market price. The primary goal of a price cartel is to increase profits by eliminating competition among its members. This is achieved through coordinated actions that prevent individual firms from undercutting each other on price, thereby maintaining higher margins. The current high inflation rates on products charged in ZiG is being caused by increased prices of basic goods, to the extent that products, such as beef, now cost an average US$12 per kg as opposed to an average US$8 or ZiG equivalent a month ago. Some products that have sharply increased in prices over the past month include rice, mealie meal, flour, sugar and soap, among other basis commodities. The sharp increase in prices, mainly experienced in all major supermarkets, has seen workers paid in ZiG at a disadvantage, paying over 80 percent more for goods this month. Price manipulation has eroded salaries by over 80 percent over the past month, pushing employees who were already advocating better wages into turmoil. shops that transact solely in US dollars. This shows profiteering by major supermarkets as consumers have no option but to buy from their shops no matter the price as they accept ZiG. Some supermarkets, among them Gain Cash and Carry, have maintained low prices in US dollars while they go on to disregard the official exchange rate opting for parallel market rates. Price cartels are illegal in the country and are blamed for undermining free market competition while causing price hikes for consumers. “The culture of profiteering by currency speculation continues to be a bane on us as a country,” said ZANU PF Director for Information and Publicity Farai Muroiwa Marapira. “However, these manouvres will not succeed because under the leadership of President E.D. Mnangagwa any untoward behaviour leaning on sabotage wil l To Page 5 The prices remain the same in tuck shops that transact solely in US dollars. This shows profiteering by major supermarkets as consumers have no option but to buy from their shops no matter the price as they accept ZiG. Some supermarkets, among them Gain Cash and Carry, have maintained low prices in US dollars while they go on to disregard the official exchange rate opting for parallel market rates.
Price manipulation has eroded salaries by over 80 percent over the past month, pushing employees who were already advocating better wages into turmoil.
Price cartels are illegal in the country and are blamed for undermining free market competition while causing price hikes for consumers. “The culture of profiteering by currency speculation continues to be a bane on us as a country,” said ZANU PF Director for Information and Publicity Farai Muroiwa Marapira. “However, these manouvres will not succeed because under the leadership of President E.D. Mnangagwa any untoward behaviour leaning on sabotage wil not be countenanced. “These acts of sabotage serve to reduce the abundant faith that was now pervading the nation as to the value and efficacy of the ZiG in our country’s development. “The desired effect of these saboteurs is to eventually see our people choosing to discard the use of the ZiG,” he said.
In an article published in the Daily News, ZANU PF secretary for security in the Politburo, Cde Lovemore Matuke, said cartels are destabilising the economy. “While the President is trying to improve people’s lives, these unscrupulous individuals and business organisations are trying to destabilise the economy by inflating prices of basic commodities and increasing the exchange rate,” he said. “As ZANU PF and Government, we will not allow these saboteurs to get away with murder. They will be dealt with decisively and will be punished severely.
As ZANU PF, we are also saying that the new currency is here to stay and that it will change the livelihoods of ordinary citizens. This currency is backed by reserves . . . and in fact, Zimbabwe is the only country in Africa which has this designed currency.” The recent price hikes come at a time authorities seem to have relaxed the crackdown on illegal forex dealers and shops that are trading above the official exchange rate.
Economist Norman Mwedziwendira said major supermarkets have hiked prices to match black market rates. “Over the past few weeks since law enforcement officials relaxed their crackdown on illegal foreign currency traders, supermarkets have been hiking their prices so as to catch up with a spiralling black market exchange rate,” he said. “Most supermarkets peg their prices in US dollars and accept ZiG using the official exchange rate. “To catch up with the rate at the same time pretending to comply with Government regulations that stipulate exchange rates, they went on to increase prices in US dollars. “They do this so that it would seem as if the prices of basic commodities are generally going up when its price manipulation.” The local currency has suffered a sustained onslaught on the parallel market with premiums reaching as much as US$1:ZiG23.
Traditionally, local markets have maintained sensitivity to parallel market dynamics, which are also the dominant factor of inflation. Mwedziwendira said prices in tuckshops remained unchanged. “The fact that prices of the same goods being hiked in major shops remain unchanged in tuckshops is an indicator that supermarkets are manipulating prices,” he said. “By hiking prices, supermarkets are losing customers to smaller businesses, in the end they will only have customers who buy in ZiG.” Price manipulation has eroded the salaries of workers, notably civil servants, who are paid mostly in ZiG. This could possibly trigger unrest among Government employees, most of whom have been seeking salary hikes to match the rising cost of goods and services.
“When the ZiG was introduced we could buy from supermarkets at reasonable prices, but now you pay over double for the same items,” said a civil servant who preferred anonymity. “It’s high time Government took action against these major supermarkets who are eroding our salaries.” Presenting the Mid-Term Monetary Policy Review Statement recently, RBZ Governor, Dr John Mushayavanhu, revealed that the Liquidity Management Committee made up of central bank and Finance Ministry officials had just been put in place to assess the liquidity situation and implement relevant policies. The apex bank also established the Monetary Policy Implementation, Monitoring and Evaluation Committee (MPIMECO) that keeps track of the key indicators to promptly identify emerging risks and ensure timely response by the RBZ.
“The MPIMECO developed a Governor’s Dashboard, which helps to provide early and daily warning signals on key monetary policy and financial sector developments and occasion appropriate and timely application of risk mitigation/management measures by the central bank. “These indicators are expected to offer the market more immediate and actionable data, allowing for better forecasting and response to shifts in the economic landscape,” said Dr Mushayavanhu.
The RBZ governor distanced the economic fundamentals from the ongoing exchange rate depreciation, instead blaming rampant price distortions. “The higher parallel market rates are implied in the pricing structures of goods and services, as opposed to the actual trading of foreign currency in the alternative market, where the rates and trades have remained low since the introduction of the structured currency. “As such, the RBZ, through the Financial Intelligence Unit will continue to deal with unjust forward pricing behaviour to minimise the inflationary pressures from speculation and greed, which fuels greedflation,” he said.