Members of the National Bakers Association will get their foreign currency requirements in full from the foreign currency auction system as part of government intervention to cushion them from exchange rate movements and subsequently reduce the price of bread which is now beyond the reach of many in the country.
Price of bread has risen to an average of ZW$ 700 per loaf which translates to over US$ 2 using the ZW$338.4921/USD official rate and US$ 1.25 using the parallel market rate of ZW$ 500/USD.
The increase, according to bakers, is attributed to rising global cost of wheat due to supply disruption from the Ukraine war and the depreciation of the local currency against the USD.
A meeting between the Reserve Bank of Zimbabwe (RBZ) and the bakers on Friday resulted in the Bank offering bakers sweeteners from the auction system.
“The Reserve Bank of Zimbabwe (the Bank) wishes to advise the public that it held a consultative meetings with the National Bakers Association of Zimbabwe (the Bakers Association) on 17 June 2022 and deliberated on the cost build-up in the bread value chain.”
“Taking into account the submissions by the Bakers Association and the need to stabilize the price of bread, the Bank agreed with the Bakers Association that its members would access their full requirements of foreign exchange through the weekly foreign exchange auction for importation of inputs and procurement of fuel for the distribution of bread across the country,”
“In view of the positive engagement with the Bakers Association it is expected that members of the Bakers Association will review the price of bread downwards. Going forward, the price of bread will be adjusted on account of economic fundamentals that include global price trends of inputs and the movement of the foreign currency exchange rate.”
However, market watchers say the move could result in other manufacturers demanding a special offer from the auction which if denied by the Bank may lead to increased prices.
263Chat Business was unable to determine how much of a price drop on bread will result from this decision from industry sources at the time of publication.