Basic commodities, especially food, have disappeared from shops in Zimbabwe as the government pushes ahead with controversial price controls retailers say were nonviable and driving them out of business.
The authorities, alarmed by escalating prices for basic commodities ahead of a tricky general election early next year, slammed price controls last week on a range of goods to cushion the public.
It accused both manufacturers and retailers of profiteering, and of a hidden political agenda ahead of the poll.
But industrialists and retailers denied the accusations, saying high inflation currently standing at 4 530 percent was mainly responsible for the price hikes.
The have argued the price controls, in some cases requiring them to slash prices by more than 50 percent, were nonviable, and driving them into bankruptcy.
As a result, most manufacturers and retailers have stopped producing and trading in basic commodities listed by the authorities.
This has resulted in scarcity of the targeted goods, as most shops have stopped selling them.
“Although the intervention by government on prices was done in good faith for the benefit of the public, it is doubtful whether the price controls are a viable mechanism to increase consumer welfare without also looking at the cost side of the production chain,” Kingdom Bank said Thursday.
“Price controls are the political solution enacted to stop price inflation (but) given that prices are determined by the market forces of supply and demand, the market clearing price resulting from such market forces is not changed by a legal limit on the price,” it added.
The stance taken by manufacturers and traders to stop trading in the basic commodities is leading to an even worse crisis.
Foodstuffs, particularly the staple maize meal, milk and meat, are those mainly affected. A growing number of people are running out of food, and cannot find it anyway.
This is leading to the development of a black market for basic commodities, at even higher prices than those which originally obtained in the shops.