Business

Prices: Rogue businesses put on notice

Flagrant disregard of the law by some businesses, which recently hiked prices of goods and services after the Government gazetted a law to protect consumers from unfair pricing could soon force the Consumer Protection Commission (CPC) to rein in the indiscipline.

The Government has, however, ruled out price controls.

Statutory Instrument (SI) 127 of 2021 came into effect on May 28 to address the rampant abuse of foreign currency accessed through the Reserve Bank of Zimbabwe (RBZ)’s weekly foreign currency auction.

It compels businesses to price their goods and services at the prevailing official exchange rate.

New data from the Consumer Council of Zimbabwe (CCZ) shows that the cost of a standard food basket for a family of six has shot up by 9,8 percent from $15 303 in April to $16 808 as at June 9.

CPC chairperson Dr Mthokozisi Nkosi told The Sunday Mail that business had turned the market into “a jungle that needs to be tamed”.

“Through observation, there has been a general increase in prices of most products; in particular, the US dollar component,” said Dr Nkosi.

“This is a disturbing and worrying trend considering the relative stability of the US dollar on the RBZ auction.

“We are further discouraged by the fact that there has not been any corresponding increase in the price of imported raw materials used as inputs. This speculative behaviour is dangerous to the stability of the economy.”

He said authorities could soon take action.

“There is rampant indiscipline. The marketplace is a jungle that needs to be tamed.

“Where there is no justification for increasing prices, businesses must respect consumers. Where businesses strongly feel prices must go up, the logical thing is to lobby Government through sectoral associations.

“Errant service providers must not tempt the Government to invoke the necessary Statutory Instruments.”

The CPC came into being through the Consumer Protection Act in 2019.

It has the power to fine businesses for unethical practices, including unfair pricing.

The recent wave of price increases could burden consumers, whose disposable incomes remain low.

In statement to The Sunday Mail, Consumer Council of Zimbabwe (CCZ) said most businesses reacted to SI 127 by increasing their US dollar prices.

“The food basket recorded an increase of 9,8 percent from $15 303 in April to $16 808 by 9 June 2021.

“The increases can be attributed to service providers who are consistently adjusting their prices to factor in exchange rate movements and transaction costs of buying forex on the parallel market,” said CCZ.

“According to the recent survey, most suppliers and outlets did not reduce their prices in Zimbabwean dollars to align their pricing with the requirements of SI 127. Instead, they priced products higher in US dollar terms to make sure they get around about the same they were getting in local currency before SI 127 of 2021.”

Confederation of Zimbabwe Retailers president Mr Denford Mutashu called for Government and business to engage.

“SI 127 of 2021 has noble intentions but has created unnecessary panic and uncertainty in a market that was stabilising.

“There are concerns already as prices are beginning to go up both in US dollar and Zim dollar terms.

“Our other fear is that the SI will cause product shortages as capital responds to the threats of fines.

“There is urgent need for the President to meet with business because there is a feeling that some in authority want to reverse the gains and progress made so far in stabilising inflation, prices and products availability across the economy.

“The policy will drive forex back in the hands of the informal trade and forex parallel market traders,” he said.

Finance and Economic Development Minister Professor Mthuli Ncube recently indicated that he might soon engage industry to discuss the rationale behind the recent spate of price increases.

-sundaymail

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