The Sunday Mail
That there are anxieties over rising prices and shrinking disposable incomes cannot be disputed.
Retailers continue adjusting prices upwards while wages and salaries are worryingly lagging behind.
Most countries around the world are grappling with this phenomenon.
In Argentina, a country that is unencumbered by sanctions like Zimbabwe, inflation accelerated to a 30-year high of 60 percent in June driven by rising fuel and food prices.
The conflict in Eastern Europe has seriously disrupted supply chains and consequently led to soaring global prices.
While the same variables have been affecting prices in Zimbabwe, it cannot entirely explain both discrepancies in prices and outrageous margins levied by local retailers.
Obtaining pricing models are seemingly indexed to parallel market foreign currency rates, including absurd cost-recovery premiums, even by businesses that are benefiting from the foreign currency auction market.
This obviously explains the significant price differentials between retailers.
There is simply no discernible pricing formula.
For example, a 2kg packet of rice of the same brand is ranging between $1 700 and $2 600 in different outlets.
Quite tellingly, this betrays the absurdity of local pricing models.
Finance and Economic Development Minister Professor Mthuli Ncube could not have put it any better when he said: “Forward exchange rate pricing is also the norm, thus creating a vicious cycle of increasing prices, which is self-fulfilling and is generating higher month-on-month levels of inflation as well as fuelling adverse inflation expectations.”
All this is affecting consumers in a big way.
As the Reserve Bank of Zimbabwe continues to argue, the existing trend in upward adjustments of prices has nothing to do with economic fundamentals, but everything to do with behavioural issues informed by lingering fears of hyperinflation.
Even in the current inflationary environment, there is really no justification for a five-fold increase in prices of goods and services.
Far from cushioning retailers, the extortionate margins continue to stoke inflation, which ultimately undercuts business performance through reduced demand and declining disposable incomes.
While explaining rising inflation in the United States of America earlier this year, former Treasury Secretary Larry Summers critically underlined the importance of human perception in shaping economic outcomes.
“(Maynard) Keynes (an English economist) talked about how the master economist had to be capable of both great mathematical rigour and shrewd human perception and I think that’s right.
“Many non-economists tend to ignore the economic laws that drive phenomena like inflation, and economists have some tendency to discount the role of human psychology in shaping . . . economic outcome,” he said, adding: “One can make — and we do in economics classes — an argument that inflation is like a change in
units.
“If wages go up by 10 percent and prices go up by 10 percent, then people are in some sense in the same place in terms of purchasing power. But people don’t see it that way.
“They give themselves credit for the 10 percent increase in wages, and they blame the political process for the 10 percent increase in prices.”
Quite clearly, no one benefits from continuously increasing prices and wages.
Something has got to give.
As we report elsewhere in this publication, the decision by the Government to convene the Tripartite Negotiating Forum (TNF) — a platform that brings together Government, business and labour — therefore, becomes hugely significant, especially considering that parties last met in April 2020.
As a people, we have the power to shape our future and destiny.
We have to acknowledge that we have a shared past, present and future, and we either sink or swim together.
So, from the TNF we can only expect mutually agreed solutions that feed into a social contract that restores the value of workers’ wages and salaries and stabilises prices of goods and services.
But all this can be possible if we appreciate the futility of pursuing parochial, self-serving interests.
As President Mnangagwa continues to emphasise, we should always be guided by the national interest.
It is heartening that parties have already conceded there is need to “give dialogue and consensus-building around major economic policy interventions a chance”.
We have a duty and obligation to future generations to ensure that we deliver a Zimbabwe that everyone is proud of.
We have the power to solve the challenges we face today.
