Zimbabwe has experienced a surge in prices of basic commodities, particularly food items, as the value of the Zimbabwe dollar continues to decline against the US dollar.
The introduction of a new 15% value-added tax (VAT) on January 1, 2024, as part of the 2024 National Budget presented by Finance, Economic Development, and Investment Promotion Minister Mthuli Ncube, has further contributed to the rise in prices of essential goods such as bread, milk, sugar, soap, and cooking oil. The increase in prices is evident, with bread prices surpassing the US$1 mark to reach US$1.30, a level not seen since 2018 when it was priced at US$1.10.
Despite the government’s efforts to prevent a price surge by reviewing its tax regime earlier this month, a recent survey conducted by NewsDay in Harare and Goromonzi revealed that prices of basic commodities have increased in both Zimbabwean dollar and US dollar terms. For example, the cost of a loaf of bread, previously priced at ZWL$7,818, has risen to ZWL$11,000. Similarly, a 2kg bag of flour has increased from ZWL$22,499 to $26,600, and a 2kg packet of rice now costs ZWL$27,599, up from ZWL$21,745.
In US dollar terms, bread is now retailing between US$1.10 and US$1.30, sugar at US$3, and cooking oil at over US$3.50, depending on the brand. The price hikes have been attributed to increased taxes and the depreciation of the Zimbabwean dollar, which now trades at ZWL$14,500 on the black market and ZWL$9,000 on the official market against the US dollar. The devaluation of the currency is a reflection of the loss of confidence in the local currency, leading to a high demand for foreign currency.
