• Mon. Apr 15th, 2024

Prices are likely to continue increasing, FEWSNET says

ByEconomic Times

Jan 11, 2023

By ETimes

The Famine Early Warning Systems Network (FEWSNET) says the country is likely to continue experiencing price increases, which are being fuelled by rising manufacturing costs and parallel market currency rates.

The country is working tirelessly to ensure economic stability due to internal economic imbalances and price increases emanating from the Russia-Ukraine conflict.

Accordingly, the central bank has issued a stern warning to contractors who were recently remunerated by the government and must desist from trading on the black market amid the continued devaluation of the local currency against the greenback.

This comes as the gap between the official and black-market exchange rates continues to widen.

“Following relative macroeconomic stability over the last few months, prices are likely to continue increasing into early 2023, further reducing the market access of poor households to basic food and other commodities,” said FEWSNET in its recent key message update.

“Parallel market exchange rates increased by nearly 15% in December from November, trading between 850-950 ZWL per USD, likely due to increasing demand for the ZWL and increased foreign currency inflows as the festive season begins.”

The country is currently experiencing blackouts lasting up to 15 hours a day due to ageing infrastructure and low water levels at hydroelectric plants.

“Additionally, widespread and prolonged national power cuts are negatively impacting most sectors of the economy, increasing the cost of production and reducing engagement in income-generating activities, thereby limiting household purchasing power and income,” stated FEWSNET.

The Treasury has maintained its economic growth projections of 4% in 2022 and 3.8% in 2023, despite the increased power outages that have hit the productive sectors of the economy – Harare

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