Price controls not the solution-Mnangagwa

The spiraling cost of basic commodities has prompted some section of the  business community to urge government to introduce price controls but President Mnangagwa has vowed not to succumb to such pressure as the move will have a detrimental effect on availability of the commodities.

In an interview with this publication last week  , Mnangagwa said he will not introduce price controls but will let market forces determine the prices to avert shortages.

“My government will not introduce price controls of basic commodities as this will result in a shortage of the commodities on the market.

“We will let the market forces determine the prices, we have had previous experience in the past where basic commodities disappeared from the shelves as a result of price controls,” said Mnangagwa.

He however highlighted the importance of price monitoring across the whole manufacturing to supply chain.

The last time price controls were introduced in 2007, there was a frenzied buying spree that emptied most shop shelves.

As a result, most manufacturers stopped producing, saying the price freeze was not viable given that prices for raw materials was sky-rocketing.

Last week, the bread price shot up to $2,50 from $1,40 as bakers lamented over wheat supply.

The Grain Millers Association of Zimbabwe (GMAZ) has assured that the situation will be normalised.

Confederation of Zimbabwe Retailers president Denford Mutashu concurred with Mnangagwa .

He submitted that Zimbabwe needs interventions on the supply side since our main challenge is production.

He said he preferred price monitoring rather than price controls as history has shown the dangers of controlling prices .

“Price monitoring ,yes, not price controls . Unless fundamentals have changed ,which I doubt, because price controls cause unnecessary shortages of controlled products . The unintended consequences include shortages of goods, emergence of black market and rise in speculative tendencies . Price controls are good for to the public in the shortest of terms and create more market distortions in the medium to long term. Controlling price is not the best of prescriptions and options at the present moment,” said Mutashu.