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Friday, March 29, 2024
HomeBusinessPrice Reduction Stalls As Negotiations Drag

Price Reduction Stalls As Negotiations Drag

The recent order by government for retailers and suppliers of basic food and services to revert to March 25 prices is facing resistance and further negotiations are currently underway between government and food industry stakeholders, 263Chat Business can report.

Prices skyrocketed beginning of lockdown as rent-seeking business owners took advantage of desperate consumers who rushed to purchase bulk stocks of foods to carry them through the lockdown period.

However, following an announcement of a price moratorium on Wednesday, prices are yet to be adjusted downwards.

“For now let’s wait until we finalise, there is a lot of negotiations happening,” Retailers Association of Zimbabwe president, Denford Mutashu said in an interview.

“Its not yet in effect. Basically what is happening is we are in negotiations as government, retailers and suppliers,” he added.

Inflation has been hovering around 560 percent since last year and took a major fluctuation mid March with economists pegging it around 900 percent now.

Emirates

However, observers remain skeptical of a favorable outcome for consumers from the negotiations for price adjustment to March 25 levels.

They say inflation is being driven by the exchange rate movements on the parallel market which are weakening the domestic currency.

Others have criticized government’ stance of price controls as likely to upset supply chains and lead to food shortages at such a critical juncture during the lockdown.

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Some also blame government for enforcing a fixed exchange rate which has bred rent-seeking behaviour in the economy.

“A fixed exchange rate provides a fertile breeding ground for rent seeking and arbitrage which have an adverse affect on the economy,” economic analyst, Prosper Chitambara told 263Chat early this week.

The official rate is fixed at Zwl 25 against the American dollar while the market based parallel rate trades at Zwl 40-44.

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