THE price of a standard loaf of bread has risen by 6,8 percent to $94 and the bakers have blamed the increase on the recent upward review of utility charges and the price of fuel. A snap survey carried out by Business Chronicle indicated that retailers in Bulawayo have increased the price of a standard loaf from $88 to $94.
Speaking by telephone National Bakers Association of Zimbabwe (NBAZ) president Mr Dennis Wallah said production and distribution costs have increased occasioned by the recent increase in utility charges and fuel price.
“It is not a hidden fact that the price of fuel went up, so obviously distribution cost goes up.
“Utilities have also moved astronomically high. All these factors result in the cost of the product spiralling upwards,” he said.
Of late, utility charges have risen significantly and in some instances by margins above 300 percent in cases such as water bills.
In addition, since the beginning of the year, the price of fuel has been increased twice with the Zimbabwe Energy Regulatory Authority (ZERA) attributing the upward review of fuel price to a general rise in prices on the international market. Early this month, ZERA increased the price of Diesel 50 in local currency to $110,41 per litre from $105,56 while that of petrol (E10) rose to $109,17 from $104,82.
In US dollars, the new price of Diesel 50 was US$1,32 from US$1,27 while petrol was pegged at US$1,30 from US$1,26. ZERA has indicated that between January and February this year, there has been increases in the Free On Board (FOB) prices for petrol and diesel and this has a knock-on effect on the pump of fuel. The FOB refers to the costs of shipping the product and as a net importer of fuel, any rise in the FOB results in price increases for the product. In a separate interview, the National Consumer Rights Association spokesperson Mr Effie Ncube said from a consumer perspective there is no justification in increasing the price of bread.
“From a consumer standpoint of view, there is absolutely no justification whatsoever for the rise on the price of bread.
“Fuel and other utilities dominate the price of services and goods downstream, but
there is no justification to the mark-ups that they did even taking that into account,” he said.
Mr Ncube said the business model that they presently have should be such that it can absorb price hikes of fuel and other utilities without necessarily passing them on immediately to consumers.
“They need to develop to a business model that allows them as businesses to function and prosper without constantly rising prices like what they are doing.
“There still has no justification for the mark-up rates that they are putting in order to respond to changes in the supply chain,” he said.
While the country had enjoyed notable price stability since the introduction of the auction system in June last year, there has recently been price increases across products.
Retailers say the increase resulted from a number of factors among them price increases by producers, arbitrage and opportunism by few players allowed to open during the lockdown period.
Manufacturers, however, argue that business have been responding to the general adjustments in rates and fees across the economy and the absorption of these costs reflected in price increases as the costs are passed on to the consumer.