Cost of living to shoot up: FewsNet
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THE cost of living is set to spike upwards this month, triggered by rising official and parallel market exchange rates, the USAid-funded FewsNet has said.
In its report published late last month, FewsNet also predicted a price hike in grain due to expected panic-buying from desperate Zimbabweans in the wake of a predicted El Niño-induced drought.
The organisation said the cost of living in Zimbabwean dollar terms was expected to continue to increase throughout the outlook period, mainly driven by rising official and parallel market exchange rates.
“The US dollar price increases for some goods and services are also likely, driven partly by anticipated production and transport cost increases,” the report reads.
“Due to relatively lower prices than formal retail shops, the informal retail sector will likely remain the preferred source of basic food and other commodities, especially among poor households. Panic-buying of staple grain will trigger significantly above-normal price spikes through the next harvests.”
The local currency is currently trading at US$1: ZWL$10 900 against the greenback on the parallel market and US$1: ZWL$6 104 on the official market.
Zimbabwe National Statistics Agency’s latest results on the food poverty datum line as of December last year showed a 22% increase from the previous month.
“In the 2024 national budget presentation in early December, the government reintroduced duties on selected basic food and other commodities that had been exempted from import duty in April 2023 when the government tried to stem high basic commodity prices and shortages.
“Additional taxes in the 2024 budget statement are expected to drive price increases for food and other non-food commodities in 2024. The government also regulated that only registered and tax-compliant informal sector retailers can procure goods from producers and wholesalers,” FewsNet noted.
Last year, government announced a ZWL$58,2 trillion budget for 2024, projecting a domestic economic growth of 3,5% next year.
This growth, according to Finance, Economic Development and Investment Promotion minister Mthuli Ncube would be backed by a raft of new tax increases in fuel and a sugar levy among others.
“Due to lower prices than formal retailers, the informal sector has increasingly become the preferred source of food and non-food items, especially for poor households. The demand for grain on the market is increasing in deficit- producing areas as own-produced stocks are depleted
“However, market availability of staple grains is reducing, with most markets in deficit areas without grain as farmers with surplus stocks speculatively withhold supplies,” the FewsNet report further indicated. _*NewsDay*_
