GOVT calls on business to reduce prices

Government is increasingly concerned that the business sector was not reducing prices for goods and services in tandem with falling fuel prices, among other factors, a cabinet minister said on Wednesday.

In an interview with New Ziana, Energy and Power Development Minister Soda Zhemu said government expected business to adjust pricing in line with the drop in fuel prices, and stabilised exchange rates, among other factors, to ease the financial difficulties consumers faced.

Yet, he said, the business sector is always quick to adjust prices upwards whenever the price of a key input, such as fuel, was increased.

“What we have seen in the past is that when the price of fuel increased even by a single cent, business would increase prices of basic commodities,” Zhemu said.

The Zimbabwe Energy Regulatory Authority last week reduced the price of petrol from $1.58 to $1.53 and that of diesel from $1.74 to $1.53 per liter. Fuel prices are a major determinant of pricing in business, and these have been rising much of the year due to the Russia-Ukraine conflict. But since early July, fuel prices have been dropping after the market absorbed the initial shock of the war.

The business sector, in shying away from responding to the fuel price falls correspondingly, instead started citing high inflation and rapid devaluation of the local currency, among other things, as the new justification to keep increasing prices for goods and services.

This, too, has now been addressed by government with both inflation and exchange rates either stabilised or reversing, but business still has largely kept its pricing north.

“Now that the price of fuel is going down, we do not seem to see that reflected in the prices of goods and services, and it is actually a concern. They should pass the benefits accruing to the consumers just as they were doing when things were difficult. Why not now?” Zhemu asked.

New Ziana