HARARE (Bloomberg) — Zimbabwe’s cabinet will set up a team to investigate a wave of price hikes on basic goods and services that suppliers say is being driven by a rapid weakening of the local currency.
The probe will look into recent price increases of 14 products including bread, flour, cooking oil and corn-meal, Information and Publicity Minister Monica Mutsvangwa said in an emailed statement on Wednesday after a cabinet meeting. “The committee will investigate, monitor and make appropriate recommendations to cabinet with a view to bringing sanity to the situation.”
Industry and Commerce Minister Sekai Nzenza will soon release a statement on the investigation.
The Zimbabwe dollar has slumped about 40% against the US currency this year to trade at 1,212, and at as much as 2,300 on the parallel market. The government has introduced a series of measures to try stem a soaring demand for US dollars, including introducing gold-backed digital tokens this week.
Previous price hikes in the southern African nation have been linked to businesses forward pricing goods and services in anticipation of further local currency weakness.
Zimbabwean money was reintroduced as legal tender in 2019 after being scrapped a decade before when hyperinflation made it worthless. It struggled to find acceptance and it’s decline pushed price growth to 837% in 2020. The national statistics agency now incorporates greenback prices when calculating inflation — that gauge measured 75% in April.
Industry representatives are holding talks with the Treasury and Reserve Bank of Zimbabwe officials on the price increases, according to Kurai Matsheza, president of the Confederation of Zimbabwe Industries, the largest business association in the country.
“In our view, everything hinges on the runaway exchange rate,” he said by phone from the capital, Harare. He ruled out the possibility of authorities imposing price controls.
“It’s too early to think that far,” Matsheza said. “If they were to think of that, we would advise them against it.”