Inflationary pressures tighten squeeze on consumers

PANASHE CHIKONYORA  

Inflationary pressures have hit Zimbabwe retailers with sales taking an unprecedented dip owing to the rising scourge which is cutting consumers purchasing power, Business Times can report.

The consumers are stretching their dollars more for a few items.

Annual inflation rose to 285% in August from 257% in July, meaning consumers are now paying more for goods.

Apart from that, hyperinflation has increased operational costs for retailers resulting in capacity utilisation dropping by 35% on average, according to the Confederation of Zimbabwe Retailers president, Denford Mutashu.

Mutashu is concerned the rising annual inflation was crippling the performance of retailers.

The retailers are also feeling the pinch of high borrowing costs after the Reserve Bank of Zimbabwe hiked interest rate to 200% from 80%, compounded by the volatile exchange rate.

In an interview with the Business Times yesterday, Mutashu said the increase in annual inflation has resulted in low demand for goods and services, which was not in tandem with the rising operational costs.

“Direct and indirect costs chew up a bigger chunk of the revenue generated in the retail sector.

“Effective demand continues to decline in formal business and high informalisation against a shrinking formal economy remains a pain. The cost of borrowing, inflation and parallel market exchange rate escalation has affected growth momentum,” Mutashu said.

He said the government should quickly arrest the high informalisation and reverse growth of the shadow economy as it continues to threaten formal enterprise while stifling revenue to the fiscus.