Further Hike In Food Prices Feared

An increase in the Zimbabwean government expenditure is reportedly exerting more pressure on inflation, thus pushing prices of basic commodities beyond the reach of the majority.

GOVT IMPLEMENTS PRICE CONTROLS ON 16 PRODUCTS

According to reports, governments debt has shot up significantly over the past five years.Not so long ago, President Emmerson Mnangagwa’s administration which faces a tricky plebiscite on July 30 bowed down to pressure from doctors, nurses and teachers, who were agitating for salaries consistent with the breadline.

Economist Tony Hawkins believes that in reality the inflation figures could be much higher than officially reported, a notion shared by the Cato Institute, which suggested last year that Zimbabwe was already in the throes of an ignominious hyperinflation.

“A lot of people think though that this is temporary although this is not…in the longer-term, there has to be devaluation after elections. In the meantime, government will continue to borrow leading to higher inflation,” he said.

“Another point that may have been overlooked is that the increase in civil service salaries will also spur an increase in private sector (salaries) as well. Private companies will have to increase their wages to correspond with government and private facilities such as schools and hospitals will also need to do the same thing and that will definitely increase the inflation rate,” Hawkins added.

Analysts have revealed that governments additional expenditure was certain to compound pressures on the fiscus, whose only recourse would be to accumulate more debt or print money.

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