Prices of most basic commodities, especially food, have risen by more than 30% since last year as the Zimbabwean dollar continues to lose value against the greenback. The new value-added tax of 15%, which began to be implemented on January 1 of this year, a year after it was introduced in the 2024 national budget by Finance, Economic Development and Investment.
Promotion Minister Mthuli Ncube has raised prices of basic commodities including bread, milk, sugar, soap and cooking oil. The price of bread, the main indicator of the price stampede, rose to more than $1 to $1.30.
The last time bread cost more than US$1 was in 2018 when it retailed for US$1.10. The price rises come despite the government reviewing its tax system early this month to prevent a price stampede. A quick survey conducted by NewsDay in Harare and Goromonzi over the weekend showed that all commodity prices have risen in US dollars and Zimdollars.
For example, the price of a loaf of bread, previously priced at 7,818 Zimbabwe dollars, rose to 11,000 Zimbabwe dollars, the price of a 2 kg bag of flour, previously priced at 22,499 Zimbabwe dollars, rose to 26,600 dollars, while the price of a 2 kg bag of rice rose kg from 22,499 Zimbabwean dollars. ZWL $21,745 to $27,599 ZWL.
The bread retails for between $1.10 and $1.30 starting at $1. 2kg of flour now costs US$2.30 instead of US$2, and a 2kg box of rice sells for US$2.60 instead of US$2.20. Sugar retails for $3 from about $2.50, while cooking oil retails for more than $3.50 depending on the brand.
The survey also indicated that most basic commodities are available in most shops, including rural shops, although prices varied according to the type of commercial activity and region.
In an interview yesterday, economist Prosper Chitambara said the increase in commodity prices was due to increased taxes and exacerbated depreciation of the zimbabwe dollar, which now trades at 14,500 Zimbabwe dollars to the dollar on the black market and 9,000 Zimbabwe dollars on the official market. .
“The devaluation of the currency is a result of the majority of agencies losing confidence in the local units. People will convert the local currency into hard currency, so the demand for dollars will undoubtedly be high regardless of the local currency or the amount of local currency being pumped into the country,” Chitambara said. Economy”.
National Consumer Rights Association spokesperson Effie Ncube said the Zimbabwean economy was suffering from a decline due to a loss of confidence in the local currency. He said the current price hikes in Zimbabwe were caused by inflationary taxes, including toll fees, fuel surcharges and value-added tax.
“Taxing our way out of current problems is not an option. In fact, new and increased taxes have been the reason behind the current price hikes. These are having a strong inflationary effect,” he said.
“Thus, in the current situation, the Budget has been the catalyst for rising costs. The Budget, like the increases in fuel, has created panic and extreme anxiety instead of providing relief to the market. Products are zero-rated to standard tax and VAT.
Ncube said economic policies must focus on productivity to address foreign exchange shortages, adding that lack of market confidence in the zimdollar and foreign exchange shortages contribute to instability and price volatility.
“We need to prioritize productivity in our economic policies in order to address the ongoing foreign exchange shortage. The policies implemented over the years do not enjoy market confidence, and our economy lacks stability,” he said.
“Much of the instability and price volatility is caused by foreign currency shortages and a lack of market confidence in the zimdollar.” The government has been forced to review some measures introduced through the 2024 national budget, with basic foodstuffs such as bread, milk, cooking oil and corn flour exempt from VAT.
Other essential goods such as meat, rice, bath and laundry soap, washing powder, toothpaste and Vaseline have been moved to the standard classification, meaning that price increases should be minimal.
The Finance Ministry announced the changes following concerns that the heavy taxes could have unintended consequences. The Ministry of Treasury established a technical committee to receive input from members represented through the Confederation of Zimbabwe Industries.
The committee conducted an impact analysis of the implementation of some measures introduced through the 2024 budget, particularly with regard to tax compliance on the way to market, and mitigating the effects of sugar on health through a special additional tax, and some customs tariffs. Lines have been removed when exempting from VAT, in order to cover the entire value chain. Newsday
