August 2010 Vol 22, Business , Financial and Property Indaba
Zimbabwe: Zim bread price hike sparks outcry
Bakers in Zimbabwe increased the price of bread by 10 percent Thursday, sparking an outcry from the government and consumers who accused them of attempting to profiteer from the flood and drought crises in Pakistan and Russia, which was cited for the hike.
Although not a staple food, bread is heavily consumed in Zimbabwe, and any price increase is widely felt across the country.
Bakers, citing flood in Pakistan and drought in Russia which has forced Moscow to temporarily suspend wheat exports, raised bread prices by 10 percent with immediate effect.
They said wheat shortages on the international market, resulting from the crises in the two countries, had increased import costs for the commodity, but did not give figures.
The government, trying to dampen inflation and calls for salary increment in the civil service, immediately reacted furiously to the bakers' announcement, accusing them of cynically trying to take advantage of the natural disasters in Pakistan and Russia.
It announced an immediate investigation into the increased wheat import cost claims, specifically demanding proof from the bakers that they had been importing the commodity from Pakistan and Russia.
'It might be a bid to fleece the consumers by taking advantage of the developments in Russia. As government, we are going to investigate their claims and make a comprehensive statement,' Agriculture Minister Joseph M ade said.
'They (bakers) should emulate seed companies and Delta Beverages (local beer br ewer) who are supporting farmers (to grow the inputs they require),' he said.
He threatened to reverse the increase if the government found they were not based on cost consideration, but on profiteering.
The authorities are walking a tight rope, anxious on one hand to keep inflation in check, and on the other to keep a lid on demands for salary increases by the civil service.
Government workers are paid a paltry US$170 per month, and there has been growin g disquiet in the civil service over the low salaries. At the beginning of the year, teachers went on strike demanding salary increases to US$2,500.
Analysts said any salary adjustment would push up inflation which the government keenly wants to keep in check.
But the bakers said they would stand their ground on the issue, rekindling fears of another food crisis in Zimbabwe.
'We are cognisant of the effects of price hikes, but we have to come up with a price that is convenient to consumers while we also remain profitable,' they said in a statement.
