HARARE, Zimbabwe - How much does it cost for a loaf of bread in Zimbabwe?
With inflation raging at more than 100,000 percent, a loaf of bread costs 16 million Zimbabwe dollars.
Now, Zimbabweans can buy three loaves with only one bank note. Authorities on Friday introduced a new 50 million bank note, state media reported.
The new Zimbabwe dollar note is worth $1 at the widely used black market trading and can buy just three loaves of bread.
It was the third time in three months that the nation's central bank issued a higher denomination note in response to record inflation.
More cash makes food expensive
HARARE, 18 March 2008 (IRIN) - Extra cash in the pockets of civil servants
ahead of the elections and a spiralling foreign exchange rate has pushed up
the prices of basic foodstuffs
and essential items by 300 percent in the
last few days, said economists.
"There has been quite a spike [in prices] in the past week," said John
Robertson, an independent economist based in the capital, Harare. Retailers
had hiked up prices because people's spending power had increased ahead of
the elections, he added.
The average salary of a civil servant went up from Z$100 million in December
2007 to Z$500 million in February 2008. Salaries were revised again last
week: a government employee can now take home more than Z$4billion a month.
The spending power of farmers and transport operators, who have access to
subsidised fuel has also increased: they pay Z$70,000 per litre, while
ordinary Zimbabweans have to fork out Z$70 million per litre for fuel, when
available.
The salary increase and subsidies have caused a chain reaction, explained
Robertson. With more money to spend, consumers have
prompted an increased
demand for imported consumer goods in the market, he said. "This in turn
created an extra demand for foreign currency as importers tried to keep up
with the surge in demand." The value of one US dollar shot up from Z$40
million to Z$70 million within a day in the parallel market.
The price of a two litre bottle of cooking oil has risen from Z$45 million
to Z$180 million within a week, said Dennis Nikisi, an economist, who
teaches at the University of Zimbabwe.
The price of essentials such as bread, meat, milk and even medicines has
been affected in a country grappling with a more than 100,000 percent annual
inflation rate.
A month's supply of antiretrovirals now costs Z$1.4 billion up from Z$200
million last week.
Maize-meal, the staple food is not available in food retail outlets in the
urban centres. "You can only access maize-meal in the parallel market, but
even that
is now becoming difficult, my sister has been trying to buy it in
the parallel market for the past one week," said a Harare resident.
When available, a 10kg bag of maize-meal sells at Zim$250 million: a price
only the salaried can afford.
Not everyone is a civil servant
Not everyone has benefited from salary hikes and subsidies: the poor
including pensioners have been among the worst affected.
Moffat Ngulube, a 70-year pensioner earns Z$50 million a month, which could
only buy him a loaf of bread (Z$20 million) and a soft drink (Z$25 million).
The remainder (Z$5 million) is not even enough to buy him a bus ticket (Z$10
million) to his house in the high density suburb of Dzivarasekwa, about 20km
outside Harare.
"I am only grateful that I have children working outside the country who
send me groceries and toiletries for use," he said. "I cannot imagine how
other pensioners are
surviving."
"The welfare system has long collapsed and does not provide relief to poor
people in Zimbabwe," pointed out Fambai Ngirande, the communications and
advocacy manager of the National Association of Non-Governmental
Organisations (NANGO).
"While the government has introduced subsidies and price controls, only the
rich have managed to buy all the commodities from the formal system and
flood them in the black market at even higher prices which are way beyond
the reach of the majority of the people," he added.
Price controls
Morris Sakabuya, deputy minister for local government minister, warned
businesses against price increases and said their licenses could be
withdrawn. "We are calling on manufacturers, shop owners and even the
transport sector to have people at heart and work towards improving the
lives of citizens."
Government forced manufacturers to cut prices by 50 percent in
an attempt to
reduce inflation in June 2007. But shortages of basic foodstuffs and
essential items worsened as manufacturers chose to either close down or
reduce production.
After widespread objections by business, the government made some upward
revisions of controlled prices in August 2007, but the move failed to boost
supplies, as the cost of manufacturing was still too high.
Most shops now import commodities from neighbouring countries, particularly
South Africa and Botswana, but because they have to source foreign currency
on the black market to buy the goods, the items are expensive when sold
locally.
The only way to curb prices would be to remove price controls, said
Robertson and Nkisi.
"The prices would certainly go up initially - but it would stabilise
eventually and would certainly be cheaper than imported goods," said
Robertson.
NANGO's Ngirande said the government needed to
engage civic society in order
to form an effective partnership in combating hardships.
Most policy makers recommend targeted safety nets rather than price controls
to help the poor cope with high food prices.
In 2000 the Zimbabwean government launched its fast-track land reform
programme, which expropriated white-owned commercial farmland for
redistribution to landless blacks, and heralded the onset of an economic
meltdown.
The government blames sanctions imposed by some western countries for its
economic problems.
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