Consumers have expressed concern over the rise in prices of basic goods and services since late May, and called upon the responsible authorities to crack the whip on errant retailers and wholesalers.
Towards the end of May, bread was selling at $33 and traded at $52 a fortnight ago, before rising to $67 last week but had been increased to $77 while seeded loaves were selling at $97 by yesterday.
The price of sugar was increased on May 27 to $127, but has since jumped to $182,59.
However, analysts say for products such as fuel, bread and cooking oil that were being prioritised on foreign currency allocation, their new prices were understandable, while the continued depreciation of the local currency reflects speculative behaviour in the market, which has been thriving on parallel market inefficiencies.
The wave of price increases has been attributed to changes in the rate of foreign currency on the parallel market, this week’s fuel price increases, and general mischief by businesses.
Interestingly, prices are being increased at a time when consumers were expecting a decline following the introduction of the forex auction system which started on Tuesday and left the rate at US$1:57,36.
Businesses were already pricing their goods and services based on the highest parallel market rate of US$1: $100, a development which should have seen prices marginally coming down since some of their costs were added by the fuel price adjustment.
Fuel prices went up to $71,62 for petrol from $28,96 while diesel rose to $62,77 from $24,93 to reflect the new forex rate following the auction system.
Fuel can now be sold in foreign currency, with petrol pegged at US$1,28 per litre while diesel is US$1,09.
Mr Obrian Mumbamarwo of Glen Norah, Harare, yesterday said it was high time Government intervened and called retailers and manufacturers to order.
“Prices continue to rise, yet incomes remain stagnant or lag far behind especially during this Covid-19 lockdown which has seen many people unable to conduct their businesses.
“The prices I saw last week are far different from what are obtaining today (yesterday). I thought businesses were supposed to be reducing prices in line with the forex auction system,” he said.
Ms Kudiwa Magwaza of Mabelreign, Harare, weighed in saying she can no longer budget anymore as prices are rising almost weekly.
A 2kg packet of self-raising flour has risen from $107 in the last weeks to $205 yesterday, while a 10kg bag or refined maize-meal sharply rose from $249 two weeks ago to $350, with a litre of Pepsi soft drink jumping from $35 to $50 as at yesterday.
A 2kg packet of washing powder now costs upwards of $394,39 from $300 recently while prices of all brands of rice have increased from $109 to between $160 and $274.
Products such as salt, eggs, dried kapenta, beef, chicken, and vegetables have also spiked.
Economist Dr Prosper Chitambara told The Herald yesterday that price developments in Zimbabwe were largely driven by movements on the exchange rate, whether official or parallel, as well as money supply growth.
“In fact, most businesses have been benchmarking their prices using the black market exchange rate. The recent official depreciation of the exchange which has resulted in the upward review of the price of fuel has also had a domino effect on prices across the board,” he said.
Another economist, Mr Persistence Gwanyanya, said the ongoing price increases reflected the required adjustments in the prices of mainly essentials that were enjoying foreign currency allocations at the fixed exchange rate of US$1:$25, at a time when the bulk of products in the market were priced at parallel market rates that had hit US$1:$100.
He added that the newly established auction system coincided with the increase in fuel prices, which partly reflects the exchange rate depreciation but also the considerably higher ethanol prices used to blend the product.
“However, the increase in prices also reflects inefficiencies, rent-seeking and speculative behaviours that characterise our market as pricing was already based on the parallel market rates for foreign currency as well as fuel.
“Going forward, we expect some measure of price stability, especially at huge and well established business entities as the foreign currency auction system improves and the dual pricing system is increasingly observed,” said Mr Gwanyanya.
Once the forex auction system is perfected and businesses get more forex, small players that will continue to follow black market exchange rates will price themselves out of the market as people will move to cheaper shops.
But Mr Gwanyanya said at this stage, the auction system was only beginning, and only a fraction of the market participated on Tuesday, making it too early to expect prices to go down.