Ishemunyoro Chingwere Business Reporter
The Confederation of Zimbabwe Retailers (CZR), says it expects consumer spending power to start picking up on the back of economic stabilisation strategies being implemented by Government as it emerged the prices of fuel sold in foreign currency has started coming down.
The Zimbabwe Energy Regulatory Authority (ZERA), on Saturday, announced a reduction in fuel prices from US$1,28 per litre to US$1,18 for blend (E20), while diesel is now US$1,09 per litre from US$1,09 per.
The energy regulator said some operators can still sell below the cap depending on their trading advantages.
Some observers say these developments, coming on the back of a successful Reserve Bank of Zimbabwe supervised foreign currency auctions systems, is likely to start seeing prices of most commodities and services declining.
Commenting on the decrease in prices, CZR president Mr Denford Mutashu, said fuel and foreign currency are the biggest cost centres determining prices and their nominal decline is a sign that the economy is now stable.
He said in the past, consumer spending power had been eroded as a result of incomes failing to match the speed with which fuel and the value of the US Dollar were increasing against the local currency.
The Government, which is the major employer, had been previously and on a consistent basis, effecting upward reviews of workers’ salaries.
“This (reduction in fuel price) is a huge positive development, which most people in the market never anticipated and I must note that this is hugely a reflection of the foreign currency market system,” said Mr Mutashu.
“Fuel and foreign currency are some of the biggest cost drivers in Zimbabwean business, so when you start seeing them stabilising as is happening, then it’s a sign of good things to come.
“So with this stability comes with the restoration of purchasing power,” he said.
Mr Mutashu said while the retail sector has noted the stability, it was, however, taken aback by a sharp increase in shop licence fees by Harare City Council that he said flies in the face of price stability that is being witnessed across the economy.
While the energy regulator announced a price reduction in foreign currency and a nominal increase in local currency — from $83,36 to $86,36 in the case of diesel and $93,15 to $97,93 for petrol, the slight increase shows that there really is no increase in terms of value.
The adjustment is actually a reflection of the movement of the local currency against the US dollar on the market.