…as gold coins uptake surges
By Lungile Siziba
Prices of goods and services went haywire in the last few months owing to a number of factors including speculators that borrowed money from banks and use it buy US dollars on the streets at higher rates so as to repay almost meaningless amounts to the banks.
Contractors involved in high impact projects such as construction of dams and roads, would also channel large amounts of their earnings to the black market to get foreign currency to store their value.
This saw prices shooting through the roof, and with it, hard working citizens who rely on salaries at the end of the month, were plunged into poverty.
But after the introduction of a raft of measures including the raising of interest rates to 200 percent and the coming of gold coins, prices have largely been coming down as exchange rates stabilised.
Rational wholesalers and retailers, who are not out there to make life difficult for consumers, have started to reduce prices.
Some retailers have just maintained the same prices while others such as service stations still have prices pegged at a rate of US$1: $820, even when some forex dealers are now selling at US$1:$750.
Reserve Bank of Zimbabwe Governor, Dr John Mangudya, said “on the back of a tight monetary policy stance they are pursuing, the official and parallel market foreign exchange rates were expected to converge in the outlook period, thereby fostering price stability and anchoring inflation and exchange rate expectations”.
In a statement after the Monetary Policy Committee (MPC) of the Reserve Bank of Zimbabwe met on August 26 to review the impact of the recent monetary policy measures on the economy, Dr Mangudya said: “The MPC noted with satisfaction that a combination of the tight monetary policy stance, favourable uptake of gold coins, effective monitoring and enforcement of market discipline by the Financial Intelligence Unit (FIU) and the review and enhancement by Government of its procurement processes and practices to ensure value for money had resulted in the stability of the exchange rate and a decline in inflationary pressures.
“As at 26 August 2022, a cumulative total of 10 000 gold coins had been minted and out of which 8 076 gold coins had been distributed to the Bank’s agents for sale.
“A total of 6 799 gold coins had been sold as at 26 August 2022, with 75 percent having been bought by corporates and 25 percent by individuals (with) 95 percent of the gold coins sold were purchased in local currency and the balance in foreign currency.”
The MPC also noted the decline in month-on-month inflation from 25,6 percent in July 2022 to 12,4 percent in August 2022.
Dr Mangudya said it was expected that month-on-month inflation “would progressively decline”, while annual inflation was expected to continue rising to reach an annual peak in September 2022 due to the lower base effect in 2021.
“To ensure sustained exchange rate and inflation stability in the economy, the MPC resolved to maintain the tight monetary policy stance, while ensuring adequate support to the productive sectors of the economy, in particular primary agriculture, agro-processing and small and medium enterprises (SMEs) as follows: Maintaining the Bank policy rate at 200 percent per annum; and maintaining the medium term accommodation interest rate at 100 percent per annum.”
Prices have been on a decline, with most major retailers competing to reduce prices. The price of 1 litre fresh milk, which was around $1 300, has now come down to about $800.
Similarly, beef was selling for between $5 000 and $8 000 per kg, but now once can get good quality beef from around $2 800 per kg.
Cooking oil had raced to $4 000, but some brands such as Cook More are now available at about $3 000.
Economic analysts expect the prices to continue to fall in response to measures such as the introduction of gold coins and raising of interest rates.
Price declines will allow employees that have not obtained decent salary reviews to once again become competitive on the market.
