Zimbabwe's economy is fragile and it does not have its own currency
Zimbabwe's economy

Prices of basic commodities are rising sharply in Zimbabwe as consumers grapple with eroded incomes, labor relations sour over salaries and the general quality of life declines.

Prices of virtually all basic commodities have risen at least three-fold during the course of the year as producers keep them in line with prevailing U.S. dollar to Zimbabwe dollar exchange rate.

Patrice Chidakwa, who said he was self-employed, said price increases had become “fashionable” lately.

“It looks like we are going back to 2008 when prices of commodities would go up two or three times in a day. These days you can’t guarantee that the prices shown on tags on the shelves will be the same by the time you get to the sales point.

“People should also try to stay healthy because medical fees have also gone up sharply. And look at what they are doing with electricity and fuel prices. Are we going to survive?” he asked.

The Zimbabwe Energy Regulatory Authority (ZERA) announced Wednesday that it had approved a four-fold increase in electricity tariffs, following an initial increase in August which saw domestic consumers paying 27 Zimbabwe cents per kWh from 9.86c per kWh.

This translated to about 3 U.S. cents per kWh then and ZERA now says that it will apply an indexation formula beginning November to enable electricity companies to recover from inflation and exchange rate changes.

Utility ZESA Holdings is currently struggling to provide enough power with domestic consumers spending up to 18 hours a day without and only getting it at night during off-peak periods.

Petrol prices which were pegged at 1.31 Zimbabwe dollars were up to 15.64 dollars as at Oct. 6. ZERA is now increasing them almost on a weekly basis, usually citing exchange rate and free on board price movements and the current duty regime.

Commuter omnibus operators have also increased fares as a result of the fuel price increases, further straining the incomes of the lowly paid.

With the agricultural season upon Zimbabwe, many farmers are struggling to raise enough money to buy seed and fertilizers after producers also hiked prices.

Xinhua on Friday saw a number of farmers checking seed prices and complaining that they would not be able to secure enough seed.

“I will have to reduce the hectarage under maize this season. I have noticed that prices from the various seed houses vary from about 43 dollars for a 2 kg packet of maize seed to more than 1,500 dollars for a 50 kg bag. Not many people can afford this,” said Trynos Mandonga.

Finance minister Mthuli Ncube has during the course of the year predicted that prices will fall, starting in April and then in June, but they have continued to rise sharply instead.

This week he predicted that the monthly inflation rate, which was 18.04 percent in August, will fall to 10 percent by December on account of ongoing fiscal and monetary policy reforms.

However, many people remain skeptical given the failures of the past in relation to prices.

The country has also been hit by bread shortages amid speculation that bakers want to increase prices by about 50 percent from the current 10 dollars a loaf.

There are also fears that maize meal will soon disappear from the shelves following a recent government upward review of the price of maize being delivered to grain procurer the Grain Marketing Board.

Local authorities are also increasing service charges. Capital city Harare in July increased them by about 300 percent and is currently seeking a 900 percent water tariff hike citing, among other reasons, the increase in prices of water treatment chemicals and cost of electricity.

The rising prices have resulted in many workers agitating for wage increases. Doctors at government institutions have been on strike for more than a month while the rest of the civil service is also pushing for wage increases at the prevailing U.S. dollar to Zimbabwe dollar rate. Enditem

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