Inflation hits retail sector

THE retail sector in Zimbabwe is seen declining this year due to high inflation and a widening rift between prices and incomes, the Confederation of Zimbabwe Retailers (CZR) has said.


CZR president Denford Mutashu told NewsDay in an interview that 2019 had started off with high inflation and a widening rift between prices and incomes, which was not good recipe for retail growth.

“Spending power is weakening as consumers’ disposable incomes decline, and that will also affect our rate of stock turn as well as sales. Further, forex shortages and attendant high costs of sourcing forex are also likely to impact consistent supply of products. It will also put upward pressure on the cost bases of many retail establishments,” he said.

Latest data from the Zimbabwe National Statistics Agency (Zimstat) indicate that the country’s year-on-year inflation rate surged to 42,01% in December 2018.

“Again, we start the year with a huge blow; with violent attacks which took place in January, resulting in some retail shops being razed down to the foundation, while others were vandalized and looted, resulting in losses running into millions of dollars,” Mutashu said.

“So we have started the year in loss and recovery mode, with some players actually out of business. If we don’t get access to facilities to replenish and recapitalise, it might negatively impact growth for this year.”

Last month, Zimbabwe witnessed widespread protests against a steep hike in the prices of fuel and general economic decay, which turned violent when security forces used excessive force in a bid to quell the protests.

In 2018, Mutashu said the key highlight was the lack of adequate foreign currency for retail players to meet international obligations. He said some retailers and value-chain players had to resort to the parallel market, where the cost of accessing foreign currency continued to edge up, putting an upward pressure on the general price levels.

“The forex shortages also affected margins and merchandise assortments. There were also cash shortages, particularly in the countryside and it affected transactions. Supply was
fairly stable although shortages were experienced, especially for basic lines,” he said.

“We also don’t forget the violent attacks that took place in August 2018, resulting in retailers losing millions during shop vandalisations and lootings.”

Commenting on the shelf space, Mutashu said local producers were currently facing bottlenecks, mainly caused by foreign currency shortages and the high cost of doing business, resulting in imported products claiming some of the space, aided by the removal of import restrictions.


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