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Industry pressure leads to price increases in Zim
Supa Mandiwanzira, South African Broadcasting Corporation (SABC)
July 20, 2007

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http://www.sabcnews.com/africa/southern_africa/0,2172,152905,00.html

The Zimbabwean government appears to be acceding to pressure from industry in the aftermath of huge reductions in retail prices of basic commodities. In an about turn, the retail price of cooking oil has been increased by 400% and price monitoring authorities have started engaging manufacturers to find common ground.

This comes after a three-week price war that has seen prices tumble on government directives, giving rise to unprecedented shopping sprees. A 750ml bottle of cooking oil had been priced at 22 000 Zimbabwe dollars - the equivalent of just R1. Because the price was not viable, the commodity simply vanished from supermarket shelves. Now government has made a review and increased it by 400%. Economists say this was inevitable.

John Robertson, an economist, says: "Any time you reduce the price to ridiculously low levels, you increase the level of demand to absolutely everybody trying to hoard, trying to build up stocks because they know that it can't last. Government has at last realised that there is basic law of economics that will come into effect to drive up the price of many things."

Plight of producers Consumers feel that as much as they appreciate bargains, the plight of producers cannot be overlooked. They say such increases must be extended to more commodities to avoid shortages.

Starting this week, price monitoring officers are meeting manufacturers and captains of industry in a bid to come up with prices acceptable to both industry and consumers.

In an interview with SABC News, Calisto Jokonya, the Confederation of Zimbabwe Industries president, said negotiations are going on well and considerable progress has been made.

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