Harare- Grain Millers Association of Zimbabwe (GMAZ) has revealed that flour prices might be spiked by 10% chiefly due to high-interest rates, currency depreciation and the Grain Marketing Board’s increase in wheat prices, a scenario that is to going to push up the prices of already exorbitant bread.
The announcement comes barely four weeks after Central Bank Governor John P Mangudya assured the nation that bread prices will not go above a single greenback using the official rates. The governor in a circular revealed they have reached a consensus with the Bakers Association of Zimbabwe that will result in reduced bread prices.
GMB hiked wheat prices by 8% while the government raised interest rates by 120 basis points from 80% to 200% to curtail speculative borrowing, especially from the private sector. This has, however, increased the Board’s finance costs as borrowing became too expensive.
“The aggregate impact of all these headwinds will be around 10% increase in the price of flour to bakers,” GMAZ said in a statement accompanying the circular.
“However, individual millers and bakers will continue to deliberate on prices leveraging on quantity discounts, payment terms and any other considerations.”
This year alone, the Zimbabwe dollar has lost value by 71% against the greenback and since its introduction in 2019, losses have widened by over 300%.
During the latest auction market held on Tuesday, the Zimbabwe dollar widened month-to-date losses by six per cent after succumbing by 3% to 391.5339 from 379.2280 traded last week closer to breaking the 400 region against the greenback.
On the parallel market where most of the activity takes place, the Zimbabwe dollar has already widened losses to ZWL 750 while others charging ZWL 800 against a single US dollar.
When the auction market commenced on 23 June 2020, the Zimbabwe dollar started trading at ZWL57.3582:US$1.
Lack of confidence in government policies and the government itself has set a huge setback to the resuscitation of both the Zimbabwe dollar and the economy at large as inflation, skyrocketing exchange rates and excess RTGS liquidity continues to haunt Zimbabwe’s economic environment.
The government has been passing contradictory policies which waned trust and confidence, a situation that has scaled up behavioural economics to override economic policies.
GMAZ also bemoaned the latest fuel hike of further increasing costs. The soaring fuel prices are a result of the Russia-Ukraine war which has disrupted the global supply chain causing immense shortages.
However, it is worth noting that even before the outbreak of war in Ukraine on February 24 this year, Zimbabwe already boasted exorbitant fuel prices within the SADC region.
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