PRICES of basic commodities this week surged on the back of Zimbabwe’s galloping inflation and the dollar’s further crash on the black market.
Although the inflation figures for February have not yet been officially released a number of companies are estimating it to be more than 160 000%.
The Zimbabwean dollar has been on a major slide against major currencies over the past two months.
This has pushed the price of fuel, the key cost in production, to $50 million a litre.
With the parallel market now being the major source of foreign currency, it means companies have to adjust their prices according to the black market rate in order to remain viable.
Manufacturers this week reviewed their prices by between 200 and 260%. Company executives who spoke to businessdigest said further reviews were possible this week as the Zimbabwean dollar continues its plunge.Â
A survey conducted this week showed that most shops increased prices by more than 240% in the past two weeks.
A two litre bottle of cooking oil now costs about $220 million from $70 million at the beginning of the month.
A 2kg packet of rice now costs about $80 million, up from between $38 and $40 last week.
A bar of washing soap is going for $45 million from $22 million while a two litre bottle of Mazoe Orange Crush costs more than $55 million, up from $25 million.
Carbonated drinks now cost $10 million from $4,6 million. Delta this week increased the price of beer from $8 million a pint to $20 billion.
Analysts have attributed the massive rise of basic commodities to the fall of the dollar against major currencies.
“The weakening of the Zimbabwe dollar against major currencies has been a reflection of the rise of real prices of commodities relative to prices of the same goods in US dollars,” economic consultant John Robertson said this week. The parallel exchange rate of US$1 was $1 900 000 at the beginning of the year.Â
This rate was $40 million on Wednesday this week.
“The impact is being felt by the ordinary man in the street as goods and services are being priced using parallel market rates at a time when disposable incomes are not being adjusted in line with parallel market rates,” said Zimbabwe Allied Banking Group economist David Mupamhadzi.
The price of bread is now $10 million a loaf from $4,5 million.Â
However, bakers are already pushing for an increase in the price of bread to between $10 million and $15 million a loaf.