HARARE: A new pricing law approved by Zimbabwean President Robert Mugabe as inflation exceeded 3,700 per cent could worsen rather than relieve widespread shortages and price rises, analysts warned on Thursday.
The National Incomes and Pricing Commission Act was signed into law on Monday as part of a clutch of measures aimed to rein back galloping price rises which reached a new high of 3,714 per cent in April.
It provides for the appointment of a commission “to monitor price trends of goods and services, producing price monitoring reports and initiating corrective measures in cases of unscrupulous businesses affecting Zimbabwe’s pricing system”. But analysts were doubtful that the law would rein in the inflation spiral, warning instead the new controls could worsen shortages of basic goods and spawn a burgeoning black market.“What we have noticed in the past is that if controls are imposed, goods disappear from the formal market only to reappear on the black market at more than double the official price,” Best Doroh, a financial analyst with leading finance group ZB Financial Holdings, said.
“The law is not addressing the issues. We need to make sure industry is able to produce and bring the economy back on track.” University of Zimbabwe economics professor Tony Hawkins said the measure may only bring short-term relief to Zimbabweans sinking deeper into poverty as inflation spiral shows no sign of relenting.
“The incomes and pricing act will only have a short-term effect and I don’t think it’s very different from all previous measures such as the price controls which have failed,” Hawkins said.
“Inflation may slow down for a few months but it will bounce back. The new law is more (about) threats than anything else.” Harare-based independent economist Thomas Mutswiti said Zimbabweans should “brace ourselves for the worst”. The annual inflation rate has been on a roller-coaster ride since December 2004 when it shot up to 622.8 per cent. In March this year it breached the 2,000 per cent mark to reach 2,200 per cent.
Zimbabwe’s Central Statistics Office attributed the latest jump, reported on Thursday, to the soaring cost of domestic power, meat, vegetables, gas and other fuels, as well as passenger transport.
The inflation rate translated into a 36-fold price increase in the year since April 2006.—AFP
