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Inflation Remains High Despite Its Significant Decline – Retailers

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By Stephen Tsamba


THE Confederation of Zimbabwe Retailers (CZR) has noted that although the country’s annual inflation significantly dropped between July 2020 and April 2021, the rate remains “very high” and not ideal for economic stability.

This is contained in the CZR’s overview of the 2021 retail environment and contained in its input into the 2021 mid-term fiscal policy review.

“While annual inflation declined significantly from 838% in July 2020 to the last recorded 194% in April 2021, the rate is still very high and far from the 10% which is associated with ideal economic stability,” the retailers’ group said.

CZR stated that according to a recent report by the World Food Programme (WFP), 83% of households in Zimbabwe are struggling to buy food for their families and other basic needs. The WFP said by the end of March 2021, an estimated 2.4 million people were struggling to meet their basic food needs.

“A report by the World Food Programme established that 83% of households are now struggling to buy food for their families and are unable to buy basics such as mealie meal, salt and cooking oil.

“According to WFP, by the end of March 2021, an estimated 2.4 million people were struggling to meet their basic needs, coping by skipping meals, selling their hard-earned assets and taking their children out of school.”

CZR said that they had observed the economy was affected by inflationary pressures, the decline in disposable incomes due to unemployment and underemployment, reduced incomes and Covid-19 related costs and inefficiencies.

“It is our observation that the operating environment continues to be affected by local currency inflationary pressures, the decline in disposable income due to unemployment and underemployment, reduced incomes; and the ongoing Covid-19 related costs and inefficiencies which continue to periodically affect global supply chains, while the real cost-push effects of transitioning out of a hyper-inflationary environment have required continual evaluation and adjustment of the retail players’ business models.”

The CZR said the national coronavirus induced lockdowns constrained prospects for the first quarter as most retail outlets were open for reduced trading hours, demand was weak due to closure of other sectors and reduced disposable income.

It said although lockdown measures were relaxed at the beginning of March this year, demand by consumers remained low.

“The national lockdown which was imposed on the country for the first two months of the year, severely constrained prospects for the first quarter. While most retail outlets were open for reduced trading hours, demand was weak, mainly due to the closure of other sectors of the economy during that time and reduced disposable incomes.”

The overview added many retailers were targeting volume growth balanced with competitive pricing, operating cost control and working capital management.

“While many players have been targeting volume growth, balanced with competitive pricing, operating cost control, and working capital management, the highly dynamic operating environment remained challenging due to the ever-increasing cost of doing business, liquidity constraints, high cost of borrowings, among other factors.”

The CZR projects that while prospects of the local agricultural season appear positive, inherent complexities remain.

According to the Food and Agricultural Organisation (FAO), maize production is estimated at 2.7 million tonnes in 2021 and some crops have also performed better than last year’s drought season.

“As we project for the upcoming months, while the prospects of the local agricultural season appear very positive, it should be noted that the inherent complexities remain. According to the Food and Agricultural Organisation, maize production is estimated at 2.7 million tonnes in 2021, more than double the five years’ average; and some crops have also performed better than last year’s drought season. This is likely to benefit the economy by improving disposable incomes, reducing the food import bill and stabilising prices.”

However, CZR said the group remained optimistic that government would intensify the vaccination programme to the point of achieving herd immunity to help improve economic stability.

It also expects economic growth to remain modest with a positive impact expected to be felt in early 2022.