Volatile exchange rate afflicts pain on consumers
TATENDA CHIKARA IN MASVINGO
The exchange rate volatility has fuelled a spike in prices which has afflicted consumers, the Consumer Council of Zimbabwe has said.
The Zimbabwe dollar continues to depreciate in both the formal and informal markets.
This week, the local dollar was trading at ZWL$1 000.0227 US$1 in the formal market and ZWL$1800: US$1 in the parallel market.
This has pushed the consumer cost of living.
Speaking to Business Times, the CCZ public relations officer Christopher Kamba said that the monthly basket figure for March had risen to ZWL$ 489 381 depicting a 11.1% increase from ZWL$ 441 036 in February.
“…Most of these [price] increases are due to volatility mainly in terms of the exchange rate as we have seen that especially the parallel market rate has increased to [unprecedented] figures,” Kamba said.
He added: “The cost of living as measured by the CCZ low income urban earner family basket of six has increased from the February figure of ZWL$ 441 036 to the March figure of ZWL$489 381 depicting an increase of 11.1%.
“Notable price increases were recorded in mealie-meal with 14,7%, brown sugar 9.28%, fresh milk by 500ml 23.2%, tomatoes per kg 31.2% and cabbages have increased by 41.3%.”
Economist and director at Labor and Economic Development Research Institute of Zimbabwe, Prosper Chitambara, said the loss of value of the local currency against the United States dollar as well as increase in money supply of the Zimbabwe dollar caused by raising of civil servants wages and others has catapulted the price increase.
“The surging of basic commodity prices we are observing is caused by continued loss of value of the local currency as compared to the American dollar. We think that this is caused by an increase in money supply in the country. This has been caused by an increase of most workers wages,” Chitambara told Business Times.
He added: “… So because our economy is now largely dollarised this leads to high demand for the United States dollar as most people are paid in Zimbabwe dollars. This continues to de-value our local currency.”
However, Chitambara urged the government to practice monetary discipline, limiting money supply in the economy.
