The hyperinflationary environment is causing everything in Zimbabwe – including food- to soar at an astronomical rate.
Zimbabwe’s month on month inflation stood at 16.5% in December 2019 according to national statistics released by the Reserve Bank of Zimbabwe (RBZ). The price of staple food roller meal, however, remained stable after the government introduced a subsidy and pegged the price at ZWL$50 per 10kg bag to cushion vulnerable consumers.
Less than 2 months after government re-introduced subsidies on roller meal, the price of a 10kg bag of roller meal has been increased by 40% with immediate effect.
“Government has reviewed upwards the subsidised price from ZWL$50 to ZWL$70 per 10kg of roller meal against the prevailing market price of the product,” read the statement released by the Ministry of Finance and Economic Development.
Due to grain shortages, black market players were selling the commodity at higher prices to desperate consumers.
“The wide gap between the market and the subsidised price has created arbitrage opportunities for scrupulous players,” the government has claimed. Even though the government had pegged the price at ZWL$50, the product continues to be sold for prices between ZWL$60 and ZWL$80 in the black market.
Zimbabwe is currently facing the worst drought in over 10 years and has thus resorted to importing expensive grain from South Africa and Tanzania.
Treasury is bleeding money to subsidise roller meal only to have scrupulous players in the market take advantage of the subsidy.
According to the Ministry of Finance and Economic Development, the only way to address market and supply distortions is to raise the price of the product. The government will also draft systems to punish any market player found selling the product above the approved subsidised price.