Rudo Saungweme

Government has indicated that the expected price increase of mealie-meal next month by Grain Millers Association of Zimbabwe (GMAZ) is not justified as Government introduced a rebate mechanism meant to cushion manufacturers and business following the recent increase in the price of fuel.

The rebate system provides tax relief to registered businesses by offsetting the margin of the fuel price hike through the Value Added Tax (VAT) system, Harare Post has learnt.

Speaking in an interview with The Sunday Mail, Industry and Commerce Minister Mangaliso Ndlovu said, “We made an important agreement with the industry players: that there is no justification whatsoever to increase prices as a result of a fuel hike. We agreed that the rebate system is a convenient mechanism to ensure that there are no extra costs that are passed on to the final consumer.

“We managed to dichotomise the issue at hand and we came up with an agreed position that fuel alone is not the major contributor to the cost of production. Fuel alone does not account for more than five percent of total costs on average. It is only in the transport sector where the cost of fuel can lead to a direct upward variation of 40 percent,” he said.

GMAZ highlighted the increase in the price of fuel and processing costs as the reason for a rise in the price of mealie-meal.

Millers plan to increase the wholesale price of a 10 kg bag of mealie-meal from US $6.38 to US $7.61 and the retail price from US $6.99 to US $8.99.