Zimbabwe’s consumer watchdog says tremors of Russia’s invasion of Ukraine continue to be felt on the domestic economy after prices of basic commodities shot through the roof, pushing the cost of living to astronomical levels.
Experts have already warned that the conflict, which began on 24 February, will affect manufacturers who rely of imports for throughput and trigger a new wave of price increases.
Russia is also the third-largest producer of wheat while Ukraine is ranked 9th in the world. Combined, the two countries account for about 15% of global wheat production.
According to the latest Consumer Council of Zimbabwe (CCZ) report for April, the cost of living as measured by the Low Income Urban Earner Monthly Basket For a Family of Six increased from the end of March figure of ZW$92 192.89 to ZW$98 279.13 by the end of April 2022, showing an increase of ZW$6 086.24.
The food basket increased by ZW$5 551.99 (16.77%) from ZW$33 092.52 by the end of March 2022 to ZW$38 644.51 by the end of April 2022.The report shows that the price of detergents increased by ZW$534.25, a 21.68% margin from ZW$2 463.87 to ZW$2 998.12.
“All products on the basket except for items like rice and flour among others have increased; the most notable ones are onions by 27.31%, cooking oil 49.61% and meat by 29.49%. Most of the increases follow the parallel market rate e.g. local tuckshops are now demanding payment in US dollars which is now at ZW$360 for US$1,” the report reads.
“The Russia and Ukraine conflict continues to have spillover effects on international markets as well as domestic prices as prices of cooking oil and fuel continue to increase at an alarming rate. The parallel exchange rate rose from ZW$300 (beginning of April) to ZW$360 (end of April), most retailers are following this exchange rate which has seen products rising on a daily basis.”
Of late, the exchange rate has been exposing the government’s assertions that the economic fundamentals are strong, only sentiment, speculation and black market activities are wrong.
Mnangagwa’s 7 May series of measures to contain money supply and stem inflation, including suspending lending, opened a Pandora’s box. The central bank has since made a U-turn on the interventionist measures while Treasury has waivered import duty on basic commodities to cushion consumers from the soaring price increases on the domestic economy.
After the Reserve Bank of Zimbabwe took a number of measures to contain money supply and stem inflation, the exchange rate continued to dip, indicating there were underlying problems at play rather than what the authorities have been saying.