The Confederation of Zimbabwe Industries (CZI) Tuesday said there is no justification for the ongoing increase in prices of basic commodities attributed to the recent re-instatement of import duty by the Finance minister Tendai Biti.
In his Mid- Term Fiscal Policy review last month Biti announced the re-introduction of duty on selected basic commodities including cooking oil and maize meal.
CZI president Joseph Kanyekanye said the restoration of import duty by the government was an opportunity for local companies to make profits.
“We did not envisage an increase in prices. There is no justification to increase prices for basic commodities. We are of the belief that local goods must be cheaper,” said Kanyekanye.
He said they had a meeting with business leaders yesterday where wholesalers said they had not effected any price increase adding it could be retailers increasing the prices.
“If imported products have increased therefore we need to buy Zimbabwean products. In the timber industry we do not see the need to increase prices after the mid-term policy presentation,” Kanyekanye said.
A local economist Joseph Mverecha said the increase in prices was expected to persist during the course of the year in reaction to the re-instatement of import duty by the government.
“We can expect that prices will rise further. The effect of import duty will be distributed to different sectors at different stages this year,” he said.
Mverecha, however, said inflation was likely to remain between 4,5% and 5% target by year end.
He said the increase in prices could not be linked to the South Africa rand as in the past month it had been strengthening while the United States dollar and euro were in crisis.
A snap survey yesterday showed that a two litre cooking oil bottle is now selling for between $3,99 and $4,50, 2kg flour has increased from $1,85 to $2,36, while roller meal was between $4,40 and $5,65.
Finance minister Tendai Biti, in his Mid-Term Fiscal Policy said the supply of most basic commodities by local industry has significantly improved hence the need to introduce the import duty on selected products.
“The re-instatement of duties on maize meal and cooking oil will improve the value chain from the farmer to the industry through contract farming, increase capacity utilisation, stimulate local production of stockfeed and also enhance employment levels,” Biti said.
Biti, however, suspended duty on salt and rice until the end of the year. Annual inflation for July as measured by the CPI rose 0,4 percentage points to 3,3% while the month-on-month rate stood at 0,3% gaining 0,1 percentage points on the June rate.
The annual inflation rate rose to 3,3% in July from 2,9% a month earlier. In July the consumer basket stood at $504,16 due to increases in the food basket.