For the first time in a decade, Zimbabwe's supersonic inflation is slowing down, with the price of some basic commodities dropping by up to 50 per cent.But it’s not clear whether this is due to measures introduced by the
new government or the shortage of hard currency to pay for goods in the
country’s recently dollarised economy.
A loaf of bread is now retailing for 50 US cents, half of its previous
price. The cost of a kilogramme of beef has dropped from eight to three
dollars and a 12.5 kg bag of the staple food mealie meal has been cut
from ten to six dollars. Before the formation of the new government –
in which ZANU-PF and the Movement for Democratic Change, MDC – prices
of basics doubled almost daily.
The official dollarisation of the economy and the lifting of
restrictive import duties on food items – measures contained in a
budget statement last month – have allowed basic goods to come in duty
free from neighbouring Botswana and regional powerhouse South Africa.
Supermarkets have restocked their empty shelves and the country is
awash with various commodities, all of them priced in foreign currency
– the US dollar, the Botswana pula and the South African rand being the
preferred tender.
Some economists believe that the decline in the price of consumer goods
can be attributed to the liberalising impact of new finance minister,
MDC secretary general Tendai Biti’s budget statement – which borrowed
heavily from the MDC’s economic blueprint.
Others, however, have suggested that it’s because there’s simply not
enough hard currency in circulation to pay for the influx of goods.
Economist Luxon Zembe, ex-president of the Zimbabwe National Chamber of
Commerce, told IWPR, "Currently there is a serious cash crisis in terms
of forex. There are plenty of goods and little money available. So
prices are going down as a result."
Remittances from exiled Zimbabweans, which had helped shore up the
economy, had dropped dramatically as the global credit crunch and the
resultant job losses have taken their toll on Zimbabweans, he said.
The flip side of the break on inflation is that the cost of public
sector services have been going up as the government tries to claw back
revenue lost when the practically valueless Zimbabwe dollar was in
circulation.