Reduce spending on luxury goods: CCZ - Financial Daily News Site

Reduce spending on luxury goods: CCZ

The Herald

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Patrick Chitumba Midlands Bureau Chief

Many Zimbabweans must shop around for the best prices and probably reduce any spending on luxury goods, amid indications by the Consumer Council of Zimbabwe (CCZ) that a family of six now requires $120 000 for food per month.

Prices of basic goods have been rising across the world mainly due to the ongoing Russian Special Military Operation in Ukraine, which has affected supply of goods and in Zimbabwe there has been extra inflation owing to currency and price manipulations.

In an interview, CCZ spokesperson Mr Chris Kamba said: “The family of six bread basket is $120 000 from the mid-month (May) according to surveys.”

Consumers needed to shop around and compare prices first owing to huge disparities in the cost of similar products at different shops.

“As you are aware CCZ conducts periodic price surveys of basic commodities on the market, and more so during this period where there has been a public outcry on increases in prices of basic commodities. One of the observations in these surveys is price disparities on a single product and consumers often want to understand the confusing disparity among prices for similar services.

“From a consumer point of view price disparities are good and bad: good in that they encourage competition amongst players, but on the other hand, they highlight greedy and profiteering tendencies from some players in the value chain,” said Mr Kamba.

The CCZ, he said, had always advised consumers to shop wisely, which includes comparing prices in different outlets.

Mr Kamba said some CCZ members had since created social media groups where they advise each other on service providers that sell affordable products.

“Consumers will try cheaper brands and if the quality is acceptable they will continue with it. Captive consumers are becoming rare species and market forces will win, so treating customers as dummies is going to be bad news for service providers,” said Mr Kamba.

Confederation of Zimbabwe Industries president Mr Kurai Matsheza said most of the commodities that were being traded had some level of foreign currency input.

“This may vary from commodity to commodity. Businesses access the foreign currency partly from the auction and also from the parallel market as we may all know that the auction is not giving 100 percent requirement. Thus a blended level of forex is different from business to business and hence different rates by retailers,” he said.

Mr Matsheza said the impact of the Russia-Ukraine conflict was significant and at the moment the full impact of it hasn’t hit the world.

“Commodities such as wheat, cooking oil, gas, fuel and oil are some of the commodities that have been affected. As you may know, the level of global supply from the two countries for some of these primary products is as high as 40 percent and a disturbance on 40 percent is a huge gap.

“The longer the conflict takes the more damage is going to be felt by the global economy. Zimbabwe is thus caught in this situation as we are reliant on imports of these commodities. Therefore, as a country we are not immune to these shocks,” he said.

Mr Matsheza said in Zimbabwe, inflation was driven by a number of factors such as the movement of the exchange rate both on the auction and parallel market.

“Imported inflation also drives local inflation. With movement of oil prices (together with other commodities), this has been feeding into the local economy. Electricity tariffs have been reviewed upwards and this has a huge impact on local inflation as electricity touches every sector of our economy,” he said.

Confederation of Zimbabwe Retailers president Mr Denford Mutashu, said the parallel market rate was affecting the prices of basic commodities in shops.

“Retailers end up buying foreign currency from the black market because producers at the moment don’t accept payment in local currency,” he said. “So as retailers it’s difficult to make a profit if we buy in foreign currency and then sell in local currency.

“Consumers want cheap commodities but the availability of foreign currency is affecting the retail price and that is why there are price disparities.”

Mr Mutashu said the Russia invasion was affecting oil and even grain not only in Zimbabwe, but across the word.

“That’s why even in Zimbabwe there is a surge in prices of goods and commodities. Globalisation is coming into play, Zimbabwe doesn’t survive in isolation and at the moment oil and wheat production and delivery are being affected by the war,” he said.

“Other countries where we used to buy oil from in the Middle East and Asia have stopped imports and are concentrating on feeding their own people and that’s a problem for counties like Zimbabwe.

“We have our local inflation and we also have imported inflation which is worsened by the fact that we are importing products. There is, therefore, need to revive our industries, maximise on mining, agriculture and manufacturing sector and push beneficiation and value addition so that we earn more foreign currency.”

Mr Mutashu said wholesalers and retailers were in a difficult situation because of the exchange rate, which comes in the form of auction rate, interbank, black market rate and other exchange rates which come into play as retailers consider the use of swipe, Zimbabwe dollar cash, US dollar transfer or US dollar cash.

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