Reports are coming out of Zimbabwe that major supermarket chains are starting to price goods on the shelf in US$ again – effectively abandoning the official government policy on currency and using the black market rate for currency conversions.
As the currency crisis in Zimbabwe continues, there are reports that some supermarkets in Harare are now openly displaying US$ pricing – a highly contentious move that goes against government policy. In effect it reverts back to the situation before the introduction of the Zimbabwean RTGS$, which was supposed to be pegged to the US$ and now trades at 1:5 on the official exchange and 1:7 on the black market.
The Consumer Council of Zimbabwe (CCZ) has said it expects the prices of basic commodities and services to increase following sharp rise in fuel prices, up nearly 50%. Last week, the Reserve Bank of Zimbabwe cancelled fuel subsidies. It told fuel retailers to source their foreign currency from the interbank market, putting more pressure on already limited supplies of forex. Retailers responded by putting prices up as the US$ to RTGS$ slid.
The Zimbabwean government reacts harshly to dollar pricing and is prone to accusing supermarket chains of price gouging. For the supermarket chains, it is a sensitive call: with a RTGS$2 gap between the official and black market rates, they face limited options:
- Selling at a loss or heavily reduced margin.
- Pricing per market exchange rates
- Limiting stock availability or cutting imports
- Closing down (permanently / temporarily)
In November 2018, retailers and fast food outlets opted to close and cut out imports. KFC closed its local outlets and supermarkets rationed imports.
Pick n Pay has revealed that its subsidiary TM Supermarkets saw profits drop 6.3% in the 52 week period to end of March as a result of the currency crisis. Note that on the balance sheet, Profits earned by TM since October 2018 have been translated at a rate of US$1 : RTGS$3.3.
