RETAILERS have started reducing prices of goods by an average of 5%, as they prepare for the festive season amid low consumer spending due to financial constraints.
BY TATIRA ZWINOIRA
This comes as retailers are trying to tackle the informal sector, which is competing with the retail market by offering goods at lower prices to consumers.
Confederation of Retailers of Zimbabwe (CRZ) president, Denford Mutashu said prices started going down last month.
“What we have done is to try and lower the prices as much as we can. So there are quite a number of promotions we have going on. Retailers are reducing prices for the festive season,” he said.
“No one can afford a price increase and a price reduction stands to benefit the consumer to try and allow customers to buy stuff for the festive season. Also, they face stiff competition from the informal market that has lower prices than the retail market, which is another reason for the price decrease.”
Mutashu said there was need to improve the manufacturing sector to enable retailers to have good pricing models.
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Towards the end of the year, many consumers flock to retail shops to buy goods, as they will be having more disposable income, mainly due to bonuses and savings made throughout the year.
However, increased job losses, company closures, lack of lending from banks, and an increased cost of living is leaving consumers micro-managing finances for the festive season.
According to the 2016 National Budget, the general price level in 2015 remained low, with year-on-year inflation opening the year at -1,3% and reaching -3,3% by October 2015. Economist, Prosper Chitambara said prices remained high due to high costs.
“It is to do with the high cost structure, so the economy is limited in reducing prices, as they [manufacturers] need to make a profit. Regulations for businesses need to be addressed towards the ease of doing business that will go towards reducing prices,” he said.
“We need more investment on infrastructure, if we have a deficit it affects its viability and in the long term prices.”
Inflation deceleration reflected the price correction, weak aggregate demand, tight liquidity, and depreciation of the rand against the United States dollar.
