Fuel charges to push prices of goods up

LIVINGSTONE MARUFU

 

Economic experts are warning that the surging fuel prices will push up prices of goods and services.

The price of petrol has gone up to US$1.73 per litre  from US$1.68  while  the pump price of diesel also went up to  US$1.76 from US$1.74 a litre.

The rising energy costs are a major contributor to high inflation.

“As industry we cannot absorb these cost increases but we can pass them on to customers and the net effect of that is that production is going to come down because there is no way businesses are going to continue producing the same products at the same volumes with these cost increases,”  the Confederation of Zimbabwe Industries  president, Kurai Matsheza said.

“With the new development in the economy the cost of production  for all goods is going to go up, leaving the manufacturing sector exposed to these challenges that threaten the survival of the sector.

Added Matsheza: “Unfortunately, this is the difficult operating environment the economy is living with daily.”

Economist Gift Mugano said the government policies have failed and the economy is going towards total implosion.

“We are going in a one way direction and there is no turning back as it seems like policy makers are passing on the net effects of external shocks without them watering down by means of policy recourse,” Mugano said.

“It is high time that the government should relook at their pricing model of fuel as they should relook at some tax heads, for example,  they should remove Zimbabwe National Road Administration road levy since we are getting that from the tollgate. Also take out the strategic reserve levy for the purposes of reducing the burden on the economy but that is not happening.”

 

He said when fuel price goes up, the pass-on effect is quite massive considering the role of fuel in the economy and this is very inflationary.

“The development will only worsen the inflationary pressures which are already giving us a headache. The economy is going to a point of no return in terms of the total economic meltdown as we are keeping giving poison to a sick person that is in the intensive care unit,” Mugano said.

“Total economic collapse is imminent with this direction and collapse normally happens on the currency side and would push us into default dollarisation which we said is going to happen in June and now we are heading towards that.”

The government has started paying some road contractors  half their amounts in United States dollar.

But Mugano said this will not stop the economy from going into a free fall.

“Yes the contractors are now being paid their 50% with US$ but they are not the only ones. What about the farmers and businesses which  get money from the parallel market,” he said.

The  civil servants representative body, Apex Council’s secretary David Dzatsunga said the situation will hit hard on a poor worker who is living on margins.

“With businesses warning  us  for another  wave of price increases, we are in  for a high jump as we are failing  to live a decent life right now. With another increase, some will die of poverty,” Dzatsunga said.

 

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