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Pricing chaos
Media Monitoring Project Zimbabwe
Extracted from Weekly Media Update 2003-39
September 29th - October 5th 2003

The government’s penchant for pursuing populist policies, which ignore economic fundamentals, is aptly demonstrated by the chaos that has characterised some sectors of the economy, particularly the retail industry. For instance, while government insists that its ill-fated price controls are in place, prices of basic commodities have continued to escalate unabated.

In some cases, government has even approved price hikes such as that of fuel, which saw the price of leaded petrol being increased from $1,170 to $1,980 per litre and that of diesel being pegged at $1,850 per litre from $1,060 for private users, The Herald (1/10), ZTV (1/10, 7am) & 3FM (01/10,1pm).

According to the reports, government would continue with its dual pricing system whereby public transport operators would obtain fuel from designated filling stations at the old controlled prices of $450 per litre of petrol and $200 per litre of diesel.

However, the situation on the ground shows that there are actually three pricing systems for the commodity, as filling stations are selling fuel at their own prices, which are higher than those stipulated by government, with the minimum price of a litre of petrol selling for about $2,200.

But the government-controlled media, which has dominated the media landscape following the banning of The Daily News, failed to take government to task on this chaotic pricing system.

Instead, The Herald (1/10) blamed players in the fuel industry for misleading the nation "when it’s accepted that it could fuel the country’s transport fleet at a cost of $1,170 and $1,060 per litre of petrol and diesel respectively" about five weeks ago adding that fuel companies would continue playing the "cat and mouse game" with government "until they achieve the intended price".

The paper deliberately ignored the fact that it is government, which set the old prices and fuel dealers rejected them then saying they were not viable. Further, it is the same paper and its stable mates that hailed the prices as the panacea to the fuel shortage when they were announced at the end of August.

Although the paper (1/10) acknowledged that the new fuel prices were below the market rate and urged government and fuel dealers to come up with a "realistic fuel price", it (2/10) then gave the impression that the fuel situation would nonetheless improve.

However, Studio 7(1/10) disputed this and quoted some retailers who indicated that the new prices were not competitive enough saying they were "actually looking at $3,500 per litre so that we can remain viable…."

Nevertheless, none of the media seemed to fully analyse the impact of the latest fuel price increases on the spiralling prices of basic commodities and its ultimate effect on the already eroded disposable income of workers.

Further, none of the media viewed the chaos surrounding the pricing of fuel in relation to prices of other commodities, whose prices are also controlled by government.

The price of bread is an example. While government pegged the price of a loaf of bread at $250, retailers increased the price to about $980 and just recently to about $1,300 a loaf of bread.

Besides initially arresting some of those found breaching the price controls, government has not stamped its authority on the issue.

In fact, the anarchy that has characterised the pricing system vindicates views by independent economists, who have been largely quoted in the private media dismissing price controls as the solution to the ever-rising cost of living.

But the government-controlled media as exemplified by The Manica Post (3/10) and The Herald (1/10) maintained that controlling prices was the solution. For instance, The Herald unquestioningly reported that government would soon "release a new set of controlled prices for most basic commodities in a move expected to restore sanity in the manner in which manufacturers and retailers are increasing prices". The Business Tribune (2/10) echoed this view and accused business of increasing prices "at will".

Without exposing the negative underlying implications of price controls, The Herald then narrowly blamed the "reckless hiking of prices" by manufacturers and retailers as the main cause of high inflation, which is officially 426,6 percent.

However, The Financial Gazette (2/10) disputed this notion in its article, Hyperinflation: causes, cures. The paper pointed out that hyperinflation is a result of "money supply growth exceeding the growth in the production of goods and services in the economy". This according to the article "occurs because government spends more money than it collects". It added: "Once inflation has become established, everyone wants to hedge against it by increasing prices".

Meanwhile, both sections of the media highlighted the adverse effects of price increases on the living standards of the public. But none of them pinned government down on what other steps it was taking to cushion workers besides controlling prices. For instance, they could have questioned government on whether it would increase the current minimum wage of about $50,000 or increase the non-taxable income for workers.

The Business Tribune for example, merely quoted the Consumer Council of Zimbabwe (CCZ) calling for government’s intervention "to cushion consumers from gross profiteering by unscrupulous retailers" who were flouting "price controls willy nilly".

The consumer watchdog made similar comments on ZBC (30/9, 8pm).

However, CCZ tried to cover up for its failure to fully fight for the rights of the consumers by alleging that, "consumers lack basic knowledge of alternative commodities when subjected to overpricing". It did not elaborate on what those alternatives were.

It is against these economic hardships that the Zimbabwe Congress of Trade Unions (ZCTU) president, Lovemore Matombo, was quoted in The Zimbabwe Independent (3/10) as calling on workers "to prepare for a mass protest against the government’s failure to address the country’s economic crisis".

The Financial Gazette revealed that there was no hope for any reprieve as the 2004 budget "may turn out to be the same old story of missed targets and unfulfilled promises". The paper pointed out that, the Finance Ministry has yet to get the required information such as "sound statistics on food requirements and projected crop output for next year" to assist it in planning, barely two months before the budget is presented.

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