Government order on prices ignored

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THE government announced sweeping price cuts in a bid to curb inflation Tuesday and said it set up a unit drawn from all its security agencies to enforce the cuts.

But most businesses -- including gas stations ordered to reduce the price of scarce fuel by two-thirds -- ignored the government's directive on Wednesday.

There were no reports of security agents arresting business managers on the first day of the ordered cuts.

"We're doing business as usual. We can't slash prices just like that. It doesn't work that way," said one store manager, speaking on condition of anonymity. Zimbabweans are increasingly reluctant to speak on the record about the economy, fearing their comments will violate new laws prohibiting criticism of the government.

Far from cutting prices, retailers have been struggling to keep up with the falling value of the Zimbabwean dollar, in some cases curtailing shopping hours to give employees time to put new, higher prices on goods.

Industry Minister Obert Mpofu announced the cuts of up to half and two-thirds on a range of basic goods and services from commuter transportation to bread, sugar, meat, milk, the corn meal staple and even newspapers, state radio reported Tuesday

Mpofu ordered businesses to revert to June 18 prices while the latest increases were investigated by the newly formed state Prices and Incomes Commission to find out if they were justified.

He accused what he called "unscrupulous and insensitive economic players" and "economic saboteurs" of profiteering and using price increases as a political ploy in a campaign to bring down the government.

"We cannot stand idly by as this situation continues. ... Government will use all the powers vested in the state to protect consumers," he said.

He said the new prices enforcement unit comprised all security arms of the state -- presumably the secret police, regular police, the military, the National Economic Crimes Inspectorate and the industry ministry's own price control inspectors.

Mpofu ordered the reduction of the gasoline price from 180,000 Zimbabwe dollars (about $ 1 at the dominant black market exchange rate) to 60,000 Zimbabwe dollars ($ 0.30 at the unofficial rate) a liter, or about one fourth of a gallon.

The largely disregarded official exchange rate stands at 15,000-1, at least 10 times than the black market rate

Prices of cooking oil, tires, soap and bus fares were to be more than halved. State controlled newspapers were to reduce their cover price by one-third, Mpofu said.

Justin Mutasa, chief executive of the daily Herald, the main government mouthpiece, said the price of newspapers would go down only when the cost of newsprint, inks and other materials went down.

"We welcome the latest intervention in the spirit that the same will be extended to suppliers," The Herald quoted him saying Tuesday.

Store managers said Mpofu was asking them to sell goods cheaper than it cost the stores to buy the goods already held in stock.

Shop closures and more shut downs of loss-making businesses along with soaring inflation were cited last month by independent consultants as a likely outcome of the nation's economic meltdown, saying that could lead to civil unrest by the end of the year.

Official inflation is running at 4,500 percent, the highest in the world, but independent financial institutions calculate real inflation on essential goods at closer to 9,000 percent.

Official inflation could be expected to drop dramatically in light of the new official prices. - AP

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