HARARE- Consumer spend across sectors in Zimbabwe has been a sharp decline and this is as a result of spiking inflation which has eroded the purchasing power. A teacher who used to earn $450 in hard currency 2 years ago, now earns about $45 following the reintroduction of the zimdollar and the subsequent redinomination of incomes.

While the currency has been converted the cost of goods have remained largely pegged in US dollar by way of conversion. Broadly a commodity which was selling for US$1 now fetches for about ZW$10 and this is true for most goods especially those with an import component.

This conversion meant a sharp and sudden spike in inflation as prices go up and the forex market is liberalised. In light of all this, one key variable has however not changed and it is the salaries of most workers particularly the key civil service segment which account for the bulk of formally employed persons in Zimbabwe.

With lower incomes, hard pressed consumers have failed to maintain their spending patterns to suit waning pursues. Most can no longer afford the basics, a loaf of bread now cost ZW$6.60 from a stable price of US$0.90. a ride into the CBD of Harare from most locations now cost an average of ZW$3 from about USD$0.5 a year ago. Annual inflation as at July come in at 230.42% which is not a joke.

Most companies are confessing the reality of a debilitating macroeconomic environment and this is expressed through falling volumes sold. Cigarette manufacturer, BAT Zimbabwe has said that in its latest earnings for the 6 months period to June, volumes eased by 20% on aggregate. Cigarettes are typically classified as habitual and addictive goods and therefore demand inelastic, which means normally when their prices go up demand may still remain firm.

However the deep cut of 20% in volumes shows the impact of the current crisis on consumption. The company said the premium brand, Dunhill recorded an 87% dip in volumes while value brands Madison and Everest recorded a decline of 21% in volumes. The low value for money brand, Ascot was quite resistant at 2% decline.