Market watchers have warned government against price controls ahead of President Emmerson Mnangagwa’s planned meeting with retailers next week, a move seen as a desperate attempt to arrest the ever increasing merchandise costs.
Inflation has soared in excess of 500 percent since beginning of the year and continues to firm as prices are indexed with foreign currency exchange rate fluctuations.
Speaking at the inaugural Rural District Councilors Meeting in Harare yesterday, Mnangagwa issued a stern warning to retailers over the recent price hikes.
“Wherever I am going these days, people are complaining about the ever-increasing prices of basic commodities, saying you promised to whip such business into line. So where is that whip?
“However, I think we have reached a point where action has to be taken because we don’t see any reason why there is this continuous rise in prices,” he warned.
But economic experts are not amused, as they fear any action taken by government to control prices will spell out disastrous results for the economy.
“If they are threatening setting of prices which is literally price control, the obvious will happen, there is no private sector person who will sell their merchandise at a loss. So they will simply stop selling and it creates shortages in the market,” executive director at CEO Africa Roundtable, Kipson Gundani told 263Chat Business.
Last year several commodities disappeared on the shelves as government had set up an adhoc committee to deal with price increases.
The move was not economically advised but political before government latter abandoned the committee and let market forces determine prices.
The consumer watchdog, Consumer Council of Zimbabwe (CCZ) says the low income monthly food basket for a family of six now stands at $1 500 from $971 between August and September, which could double for the month of October.
Prices of basic commodities have closely followed exchange rate movements which are being driven by increased money supply into the market, experts say.
There has been an increase of crispy bond notes on the market a sign that tells the printing press is now on .
“There is no sincerity in government. These people know what is causing all this. What is causing all this is the fact that they are printing money. Retailers are indexing their prices to exchange rate movements and the only thing that can materially cause an exchange rate movement is new money in the market. So anything else other than arresting this increase in money supply will not yield the desired results,” Gundani added.
RBZ has already announced it will be increasing more money on the market.