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Some prices must be "de-controlled": Zimbabwe central bank chief
Deutsche Presse-Agentur (DPA)
October 25, 2007

http://news.monstersandcritics.com/business/news/article_1368476.php

Johannesburg/Harare - Zimbabwe's central bank chief Gideon Gono has called for the lifting of some price controls, saying price adjustments are needed in the inflation-riddled country, the official Herald daily reported Thursday.

The Reserve Bank of Zimbabwe (RBZ) chief told state-sanctioned reporters that shoppers should not expect prices to remain fixed.

In July, President Robert Mugabe ordered huge price slashes and a six-month price freeze that saw shoppers descending on stores in droves, quickly emptying them of stock.

Now basics are in desperately short supply as store owners refuse to restock. The opposition Movement for Democratic Change (MDC) this week complained bread was as scarce as gold.

There must never be expectations from consumers that prices should be at the same level as three months ago, said Gono, who is one of only a handful of top officials willing to speak out against government policy.

There is also an animal called inflation, he said. Zimbabwe's annual inflation rate is the highest in the world, at just under 8,000 per cent.

'Consumers need to realize that in an inflationary environment, it was inevitable that producers need some modicum of price adjustments to create the capacity to meet their next and successive production and purchase order schedules, Gono said.

'Prices of goods like newspapers, for example, must be de-controlled so that they are available,' he said.

Independent reports say bakers are pushing for an upward review in the price of bread, arguing that a loaf should sell for at least 400,000 Zimbabwe dollars, four times the government-set price.

Bakers all but stopped baking when the National Incomes and Pricing Commission decreed that a loaf be sold for just 30,000 dollars (officially 1 US dollar but worth only a few cents at prevailing black market rates).

The price was hiked to 100,000 Zimbabwe dollars 10 days ago: less than the cost of a small bun of bread that sells clandestinely for around 150,000 Zimbabwe dollars.

Some companies and service providers have already started ignoring the price freeze. The state-appointed commission running the city of Harare announced this week it wanted to raise tariffs ninefold.

And on Wednesday dozens of activists were joined by street vendors in a brief march in the eastern border city of Mutare to protest huge hikes in water rates by the state-run Zimbabwe National Water Authority (ZINWA), said rights group Women of Zimbabwe Arise (WOZA).

Police arrived on the scene after the activists had dispersed, the group said.

© 2007 dpa - Deutsche Presse-Agentur

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