Fresh price hike hit Zim
TANATSWA KANDENGA AND TENDAIISHE NYAMUKUNDA
Hard-pressed Zimbabweans have been hit by a fresh wave of price hikes that have effectively depleted their disposable income largely as a result of the Zimbabwe dollar’s sharp decline in value relative to all major currencies, Business Times can report.
The government’s inconsistent policies are another reason for the price increases.
On the black market, the Zimbabwean dollar was selling for ZWL$12 000:US$1 yesterday, while on the official market, it was trading for roughly ZWL$6 000:US$1. The majority of businesses set their product prices based on the black market rate.
According to a survey conducted this week by Business Times, prices of goods are skyrocketing.
The price of a 10 kg mealie meal has increased to ZWL$80 000 from ZWL$ 67 775,00 at the end of December 31 2023, while the bottle of 2 litre cooking oil has gone up to ZWL$ 35 000,00 from ZWL$31 065.
A 2kg bag of rice is now selling at ZWL$ 25 000,00 from ZWL$ 21 745,00. Mazoe drink is now available at ZWL$ 35 000,00 from ZWL$25 887, 50. A crate of eggs is now costing ZWL$ 40 000,00 from ZWL$25 740.
Philmon Chereni, the director corporate affairs of the Consumer Council of Zimbabwe (CCZ) said low income urban earn monthly basket for a family of six measured in the local currency increased by 22, 66 % from ZWL$2 950 460.70 to ZWL$3 628 944.20.
“Among the top shakers in the basket were cabbage, salt, tomatoes, onions and cooking oil which rose by 97,7% , 63.7%, 56, 4%, 50, 6% and 44, 8% respectively. This is partly attributed to the high demand during the past festive season,”Chereni said.
President of Consideration of Zimbabwe Industries Kurai Matsheza claimed that the requirement for VAT registration and tax clearance certificates is driving up the cost of essential goods because manufacturers can only sell their goods to those who meet tax requirements.
“The Finance Act says manufacturers can only sell to those that are tax compliant. For the products to reach every corner of Zimbabwe there maybe distribution cost as the chain has been disrupted. On the basis of this change and taking into account that fuel, and toll fees have gone up some price increase may be experienced,“ Matsheza told Business Times.
The president of the Zimbabwe National Chambers of Commerce, Mike Kamungeremu, expressed concern as well, stating that since sellers are no longer able to claim input VAT, they are now adding the cost of VAT to a product’s cost structure and passing it along to the customer, pushing up the price of goods.
“The issue is particularly for those goods which were zero rated, the sellers were still able to claim VAT on their inputs cost on ZIMRA , but now with those being moved to the exempted categories it means sellers are no longer allowed to claim input VAT. So what it means is that they will then have to build in the VAT that they are charged into their cost structure and pass on the cost to the consumers. This is the reason why you have been seeing a number of companies hiking to their clients saying prices have gone up by 15 %, “ Kamungeremu said.
Professor Mtuli Ncube, who oversees Finance, Economic Development, and Investment Promotion, said that while some basic goods, like milk, bread, and mealie-meal, will continue to be priced at their current levels, Treasury has been alerted to the impending price increases of essential commodities as a result of the new VAT system arrangements.
He said: “Treasury’s attention has been drawn to the impending increase in prices of basic commodities as a result of the rearrangement of the Value Added Tax system were some of the goods have moved from zero rating to exemption in line with regional practice.
“Basic items that include bread, milk, cooking oil, mealie-meal, salt, sugar, flour, are exempt from Value Added Tax purpose, hence there should be no price increase , “ Ncube said.
